Michigan Legislature’s Adopt-and-Amend Strategy Struck Down – Employers Must Prepare for Higher Minimum Wage and Expanded Paid Leave in 2025

After six years of litigation, on July 31, 2024, the Michigan Supreme Court issued its long-awaited opinion in Mothering Justice v Attorney General, holding that the Michigan Legislature’s adopt-and-amend strategy, meant to avoid putting minimum wage and paid sick time initiatives on the ballot, was unconstitutional. In doing so, the Michigan Supreme Court crafted a remedy that nullified the Legislature’s amendments and reverted to the original initiatives as adopted by the Legislature.

In its 105 page opinion, the Court analyzed dense Michigan constitutional law and outlined the numerous changes which impact all employers in Michigan. Highlights include:

Earned Sick Time Act (“ESTA”)

• The ESTA will go into effect on February 21, 2025.
• Applies to all employers –including those with a single employee.
• Applies to all employees (salaried exempt/non exempt as well as hourly) and expands the allowable use while limiting the ability of employers to confirm appropriate use.
• Creates a private cause of action if an employer interferes with the exercise of rights under the ESTA or retaliates against an employee for exercising their ESTA rights.
• Eliminates the ability to “front load” sick time and requires employers to use an accrual rate of 1 hour of sick time for every 30 hours worked.
• Larger employers (those with 10 or more employees) must permit employees to use up to 72 hours of paid earned sick time per year – increased from 40 hours.
• Small employers (those with less than 10 employees) must permit employees to use up to 40 hours of paid earned sick time per year and up to an additional 32 hours of unpaid earned sick time per year.
• Allows employees to carry over unused sick time, although an employee cannot use more than 72 hours of earned stick time in a given year.

The Improved Workforce Opportunity Wage Act (“IWOWA”)

The proposed Improved Workforce Opportunity Wage Act (“IWOWA”), as adopted by the Legislature in 2018, would have raised the minimum wage to $12.00 per hour by 2022, with gradual inflation-based increases each year afterwards. The original IWOWA would have also increased the tipped minimum wage year-over-year until it matched the regular minimum wage in 2024. The Michigan Supreme Court effectively put the original IWOWA back into place, with some adjustments to account for the passage of time. Below is what the table of minimum wage and tipped minimum wage increases will be beginning February 1, 2025 and moving forward.

Industry groups across the state have already indicated that they intend to work with the Legislature and Governor’s office to amend these statutes before they go into effect. If these efforts are unsuccessful, every Michigan employer will need to review their policies to ensure they are providing the minimum amount of earned sick time under the ESTA and to make sure they are properly paying all employees the new minimum wage amounts.

If you have any questions about these laws and how they impact your business please contact Maria F. Dwyer at mdwyer@clarkhill.com, Vincent C. Sallan at vsallan@clarkhill.com, or your Clark Hill attorney.

The views and opinions expressed in the article represent the view of the author and not necessarily the official view of Clark Hill PLC. Nothing in this article constitutes professional legal advice nor is intended to be a substitute for professional legal advice.