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Court Order May Significantly Impact PMLA and Minimum Wage Requirements
On July 19, 2022, the Michigan Court of Claims ruled unconstitutional the Legislature’s 2018 amendments to the voter-proposed Paid Medical Leave Act (PMLA) and Improved Workforce Opportunity Wage Act (IWOWA) legislation. The PMLA generally requires employers to provide paid medical leave to eligible hourly employees, while the IWOWA governs Michigan’s minimum wage.
In 2018, Michigan voters, as permitted by the Michigan Constitution, proposed the Earned Sick Time Act (ESTA) and the IWOWA. The Legislature initially adopted those laws as proposed, but then amended them before they went into effect. One amendment renamed the ESTA as the PMLA. Set to take effect on August 9, 2022, the court's July 19, 2022 order would significantly impact employer PMLA and minimum wage obligations – the order voids the Legislature’s 2018 amendments, reinstating the original voter-proposed legislation.
On July 20, 2022, the Michigan Attorney General’s office filed a motion to pause enforcement of the order pending an appeal. If the court rejects that motion and its order becomes effective, the ESTA would require – among other things – that employers provide paid medical leave to each employee regardless of how long that employee has worked for the employer and whether the employee is paid hourly or by salary. The ESTA also would allow employees to accrue one hour of paid medical leave for every 30 hours worked, and it would permit employees to use up to 72 paid medical leave hours each year, subject to certain exceptions.
The voter-proposed IWOWA would raise Michigan’s 2022 minimum wage to $12, to be adjusted annually by the inflation rate. In contrast, the IWOWA currently sets Michigan’s minimum wage at $9.87 and contains annual minimum wage increases that are dependent on Michigan’s unemployment rate.
If the court does not issue a stay and ESTA becomes effective, paid medical leave obligations in collective bargaining agreements, individual employment contracts, and policies would remain in effect, unless PMLA requirements are incorporated into those documents. Nonetheless, paid medical leave obligations in those documents likely would need to be adjusted to comply with ESTA. For now, no adjustments are required.
We will continue to monitor this litigation and update our retainer clients regarding further developments. If the July 19, 2022 order will take effect, we will promptly provide our retainer clients with a detailed analysis of the legal implications.