Key Changes to Paid Sick Leave and Minimum Wage Requirements in Michigan
At People2.0, keeping our partners informed and prepared is our top priority. With this in mind, we are bringing to your attention a recent legislative update in Michigan that might have significant implications for your business operations.
Understanding the Legislation
The Michigan Supreme Court has restored key provisions of the state’s Earned Sick Time Act (ESTA), set to take effect on February 21, 2025. This ruling brings substantial changes to paid sick leave requirements and minimum wage laws in the state.
Key Provisions
- Paid Sick Leave:
- Employers with 10 or more employees must provide 72 hours of paid sick leave per year.
- Smaller businesses must offer 40 hours of paid leave and an additional 32 hours of unpaid leave.
- All employees, including part-time and temporary workers, are eligible for these benefits.
- Minimum Wage Increase:
- Prior to the ruling, the minimum hourly wage was set to gradually increase from $9.65 in 2020 to $10.56 by 2025. The Michigan Supreme Court’s decision, however, established a new, accelerated timeline for minimum wage increases, effective February 21, 2025, pending the ruling’s confirmation:
- February 21, 2025: $10.00 base rate, adjusted for inflation by the state treasurer, using July 31, 2024, as the reference point. While estimated around $12.50, the exact rate will be announced by November 1, 2024.
- February 21, 2026: $10.65 base rate, plus inflation adjustment calculated up to July 31, 2025.
- February 21, 2027: $11.35 base rate, with additional inflation adjustment.
- February 21, 2028: $12.00 base rate, further adjusted for inflation.
- February 21, 2029 onward: Annual inflation-adjusted minimum wage calculations by the state treasurer.
- The ruling maintains existing provisions for specific groups:
- Minors aged 16-17 will continue to receive 85% of the standard minimum wage.
- The training wage for employees under 20 during their initial 90 days of employment remains at $4.25 per hour.
- Prior to the ruling, the minimum hourly wage was set to gradually increase from $9.65 in 2020 to $10.56 by 2025. The Michigan Supreme Court’s decision, however, established a new, accelerated timeline for minimum wage increases, effective February 21, 2025, pending the ruling’s confirmation:
- Tipped Employee Wages:
- Restaurants and employers of tipped workers face an additional challenge with the elimination of the tipped wage credit, currently at 38%, alongside the minimum wage increase. Assuming the ruling stands, the phase-out of the tipped minimum wage will follow this new court-mandated schedule:
- February 21, 2025: Tipped employees’ minimum wage rises to 48% of the standard minimum wage, likely exceeding $6 per hour (up from the current $3.93).
- February 2026: Increases to 60% of the standard minimum wage.
- February 2027: Rises further to 70% of the standard minimum wage.
- February 2028: Reaches 80% of the standard minimum wage.
- February 2029: The tipped wage is completely eliminated, and tipped workers must be paid the full standard minimum wage.
- Restaurants and employers of tipped workers face an additional challenge with the elimination of the tipped wage credit, currently at 38%, alongside the minimum wage increase. Assuming the ruling stands, the phase-out of the tipped minimum wage will follow this new court-mandated schedule:
What It Means for You
Impact Analysis
This legislation could significantly affect your payroll practices, leave policies, and overall labor costs, especially if you operate in Michigan.
Requirements
You’ll need to review and potentially update your paid time off policies, payroll systems, and budgeting to ensure compliance with the new sick leave requirements and minimum wage increases.
Opportunities
While this change may increase costs, it also presents an opportunity to enhance employee well-being and satisfaction, potentially improving retention and productivity.
People2.0’s Support and Solutions
Strategies
We can assist you in adapting to these changes by:
- Helping you update your payroll and time-tracking systems
- Providing guidance on policy revisions to ensure compliance
- Offering insights on best practices for implementing the new requirements
Resources
People2.0 offers tools and expertise to help you navigate these changes smoothly, including:
- Compliance checklists
- Policy templates
- Access to our team of employment law experts
Benefits of Partnership
By partnering with People2.0, you can ease the transition to these new requirements, ensuring compliance while minimizing disruption to your operations.
Next Steps and Action Plan
Immediate Actions
- Review your current sick leave and wage policies
- Identify any gaps between current practices and new requirements
Long-Term Strategies
- Develop a plan for gradually implementing changes before the 2025 effective date
- Consider how these changes might affect your long-term workforce planning and budgeting
Personalized Assistance
Reach out to your People2.0 representative for customized support in preparing for these changes.
Navigating Compliance Together
Our commitment to your success extends beyond just providing services; we are your partner in navigating the complexities of the evolving global talent marketplace. By staying proactive and informed about legislative changes like the Michigan Earned Sick Time Act, we can collaboratively ensure that your business not only remains compliant but also thrives. Together, let’s continue to shape the future of work responsibly.
For more detailed information, visit the Michigan Department of Labor and Economic Opportunity website.
