Hey Compliance Warriors and Bosses!
The Road to Change
This landmark decision stems from a July 31, 2024 ruling by the Michigan Supreme Court. The court determined that the state legislature’s 2018 “adopt-and-amend” strategy violated the Michigan Constitution. This strategy involved adopting ballot initiatives and then immediately amending them without voter approval – a practice the court has now deemed unconstitutional.
What’s Changing?
- Minimum Wage Increase The IWOWA will significantly boost Michigan’s minimum wage. While the exact figure is yet to be determined by the State Treasurer, we know it will exceed $12 per hour in 2025. This marks a significant increase from the current $10.33 per hour.
- Tipped Employee Wages Tipped employees will see their minimum wage rise to 48% of the regular minimum wage, jumping from $3.93 to over $6 per hour in 2025. Notably, the tip credit toward minimum wage will be done away with.
- Expanded Sick Leave The ESTA mandates that all Michigan employers provide at least 72 hours of sick leave to every employee, regardless of their status (exempt, non-exempt, full-time, part-time, etc.). For small employers (fewer than ten employees), at least 40 of these hours must be paid.
Key Points of the New Sick Leave Policy
- Paid sick leave accrues at 1 hour for every 30 hours worked.
- Employees can use sick leave in hourly increments or smaller, depending on the employer’s time-tracking system.
- Employers can require seven days’ advance notice for foreseeable paid sick leave.
- Documentation is only required for sick leave lasting more than three consecutive days.
- Unused paid sick leave doesn’t need to be paid out upon termination, but carryover is mandatory
Legal Implications
Importantly, the ESTA allows employees to sue their employers directly for violations, potentially recovering liquidated damages, costs, and attorneys’ fees. This provision adds significant weight to the law and underscores the importance of compliance for Michigan businesses.
Next Steps for Employers
With the February 21, 2025 deadline approaching, Michigan employers should:
- Review and revise their paid and unpaid time off policies to ensure ESTA compliance.
- Verify that their wage structures align with the new IWOWA requirements.
- Consider consulting with an employment lawyer to address any compliance concerns.
Be Audit-Secure!
Lisa Smith, SPHR, SCP
Note: This blog post is for informational purposes only and should not be construed as legal advice. Always consult with a legal professional for advice specific to your situation.
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