A petition campaign has forced the Michigan GOP controlled legislatures to consider legislation that mandates employer Paid Time Off (PTO) benefits or risk sending the law to vote in November. The proposed legislation as drafted in HB 4307 and SB 212 would require Michigan employers, if they do not already provide a PTO benefit, to guarantee all employees one hour of paid sick time for every 30 hours worked.  This legislation, if passed, could have a big impact on Michigan employer’s PTO practices.

This law includes any paid time off towards its requirement for PTO including vacation, personal, and any other paid time off. Most “larger” employers provide some paid time off benefits that can be used for sick or personal time off, so this legislation’s cost may not be as great for them. But many small employers do not provide any paid time off at all. This law will require them to create a new benefit expense in their direct personnel budget line.

Sick and Personal Days Practices

ASE’s 2017/18 Michigan Policies & Benefits Survey shows that on average just over 45% of all participants offer a formal paid sick or personal day time-off benefit. Of those 45% that do, the average number of paid days off in a year (sick or personal) is 7.8 days or 62.4 hours/year.

Vacation Practices

ASE’s survey also reported that over 93% of employers provide paid vacation benefits to their employees. Employers offer on average 9.8 days/year of vacation after one year of service and the benefit increases by years of service.

Paid Time Off Practices

Paid Time Off programs have increasingly been adopted by employers en lieu of separate paid vacation and sick or personal days benefits. Most PTO programs include vacation, sick, personal time, and other time off purposes. ASE’s survey reported that 36% of employers currently use this approach to paid time off rather than separate time off benefits.

Proposed Paid Time Off Legislation

The proposed Michigan PTO legislation, as currently written, calls for one hour of PTO for every 30 hours worked and is capped at 40 hours/year for small employers (fewer than 10) and 72 hours/year for all other employers (those with 10 or more employees). The law allows recognition of an employer’s current PTO benefit but would increase it if the PTO was less than the law requires.

It also provides for accrual and carry-over from year to year of unused PTO but limits the per-year accrual and use of PTO.

The PTO benefit must be at the same rate of pay as the employee’s normal hourly wage being paid at the time of the leave.

Most employers surveyed by ASE already provide some paid time off. Required paid time off may not cause a significant expense to those employers that already provide some type of PTO benefit. The impact would be felt most by small employers. Many employers with less than 20 employees do not offer much in the way of paid time off but would now have to provide at least one week per year if this legislation passes.

ASE will continue to monitor developments with the PTO legislation and report them in EPTW.

Sources Gongwer Legislation library and ASE 2017/2018 Michigan Policy and Practice Survey.