Court Of Appeals Nixes Wage And Sick Time Hikes – Employee Benefits & Compensation

Since the fall of 2018 Michigan employers have faced the
prospect of significant increases in the minimum wage rate and in
the amount of paid sick leave they had to offer to employees. Both
of these potential increases were the result of successful voter
petition campaigns to put the issues on the ballot for a vote by
the general public. With respect to wages, the petition called for
the minimum wage to increase to $12 per hour by 2022 with upward
adjustments for inflation each year thereafter and gradually
increased the tipped minimum wage to match the regular minimum wage
by 2024. With respect to paid sick leave, the petition called for
any employer with more than ten employees to provide one hour of
paid sick leave for every 30 hours worked up to 72 hours per year
for a variety of absences (illnesses and injuries; to care for
themselves and family members; domestic violence, sexual assault;
and certain business and school closures) and for employers with
less than ten employees to provide up to 40 hours of paid leave and
32 hours of unpaid leave per year. Rather than let the proposed
increases pass as proposed, the Michigan Legislature enacted both
of the voter-initiated proposals and then amended them to
significantly reduce the wage and paid sick leave benefits.

As a result of the amendments enacted by the Legislature, the
minimum wage increase was scaled back to $9.45 per hour in 2019
with gradual increases up to $12.05 per hour in 2030 and the paid
sick leave was reduced to 40 hours per year for only those
employers with more than 50 employees.

The process by which the Legislature changed the voter-initiated
legislative changes were challenged in Court. In July of 2022, the
Court of Claims ruled that the legislature’s amendments
violated the Michigan constitution and that the voter-initiated
legislation adopted by the legislature remained in effect without
the legislature’s later amendments. The ruling was appealed and
then put on hold through February 20, 2023, leaving employers with
the possibility of significant changes to their wage and sick pay
benefits in the first quarter of this year.

Court of Appeals to the Rescue

On January 26, 2023, the Michigan Court of Appeals reversed the
Court of Claims ruling that the legislature acted inappropriately
when it adopted and then amended the voter initiatives. As a
result, the looming February 2023 changes to wage and sick pay will
not be implemented. It is likely, however, that the ruling by the
Court of Appeals is not the last word on the subject. An appeal is
expected to the Michigan Supreme Court.

Current Laws Remain in Effect

As a result of the ruling by the Court of Appeals, Michigan
Employers can continue to pay the current minimum wage of $10.10
per hour. Small employers will have no paid sick leave obligations.
Employers with over 50 employees will continue to provide paid sick
leave at the rate of 1 hour for every 35 hours worked with a total
accumulation of no more than 40 hours per year. This, of course,
could change either by intervention of the Michigan Supreme Court
or by the newly empowered majority of Democrats in both the
Michigan House and Senate who may seek to resurrect the original
versions of the voter-initiated laws.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.