Yesterday, Michigan Court of Claims ruled that the current Michigan Minimum Wage and Paid Sick Leave laws passed by an “adopt and amend” strategy in 2018 were not properly enacted pursuant to Michigan’s constitution.

What happened?

Back in 2018 ballot initiatives were submitted calling for a popular vote to increase the Michigan minimum wage to $12/hour by 2022 and to also eliminate the tipped worker minimum wage that would increase tipped workers to the new state minimum wage rather than keeping the lower minimum wage for restaurant and other tipped workers.

At the time the paid sick time off ballot initiative was considered onerous on small businesses.  Instead of the current 50 or more definition, all businesses under the ballot initiative would have been required to have paid sick leave.  Employees of small businesses, defined as employers with fewer than 10 employees, would have been allowed to accrue and use 40 hours of paid sick time per year. Employees of businesses with 10 or more employees would have been allowed to accrue and use 72 hours of paid sick time per year. The Michigan minimum wage was to increase to $12/hour by 2022. The tipped worker minimum wage would have been eliminated, which would make all servers earn an hourly minimum wage like others, and tips would then be on top of that.  Although many in the legislature agreed for the need of the law, they had to use political maneuvering to amend the proposed ballot so at least the paid sick leave would apply to employers with 50 or more employees, and the minimum wage would be gradually increased over time.

To make the necessary changes, the legislature first had to pass the ballot initiative as is, then they were to amend it – the adopt and amend strategy.   As for the amending law, the state Senate voted 24 to 13 for law. At least 19 affirmative votes were needed to pass the measure. All 10 Senate Democrats, along with three Republicans, voted against adopting the initiative. The remaining 24 Republicans voted to pass the initiative.  The state House voted 78 to 28 to adopt the initiative. At least 44 affirmative votes were needed. Supporters of adopting the initiative included 57 Republicans (90.5%) and 21 Democrats (45.7%). 

The original Paid Sick Leave bill that was to be put on the ballot at the same time would have required most all employers to provide one hour of sick time for every 30 hours of work up to 72 hours per year.

Before the ballot initiatives could be voted on by citizens in the November election, the Michigan legislature passed (and Governor Snyder signed) the amended laws that we had up to yesterday, apparently.

Instead of the above, the amended minimum wage law had a gradual step up in minimum wage that was set to reach $12.05/hour in 2031, and the paid sick leave law applied to employers over 50 employees in size and required one hour of paid sick leave for every 40 hours worked. It was capped at 36 hours annually instead of the 72 hours in the original ballot language.

The Court of Claims held in Mothering Justice v. Dana Nessel (COC Docket No-21-000095) that the adopt and amend strategy is unconstitutional because the Michigan Legislature does not have the authority to pass a law in the same legislative session where they in turn amend that same statute.

Looking back, many people thought that the adopt and amend strategy may not be legally appropriate.  However, there was confusion.  There were two Attorney General Opinion letters at the time. An early one from AG Frank Kelly said that the adopt and amend was unconstitutional.  But a later opinion by AG Bill Schuette said it was legal to adopt and amend. The Michigan Supreme Court in December of 2019 elected by a 4-3 decision to not rule on the constitutionality at that time. The current Michigan Supreme Court will no doubt get a second chance to look at this case.

What happens now?

No doubt an appeal will happen.  Michigan employers will have to pay the minimum wage under the original law as it was passed before being amended. The minimum wage will now be $12/hour.  Employers, including those under 50 in employment, will now have to implement the original paid sick leave law – one hour per 30 hours worked up to 72 hours of paid sick leave per year. 

Employers will now have to scramble to come into compliance with the re-constituted original laws passed before being amended.

ASE will keep its members updated as soon as more information develops. Please join us this Friday, July 22 at 9:00 a.m. for Conversations with Mike & Tony where they will give any additional updates.  If you are not registered for the series, please register here.

Source: Gongwer Court Orders Laws Raising Minimum Wage, Assuring Paid Sick Time Restored (7/19/2022); Gongwer 2018 Minimum Wage, Paid Sick Time Laws Restored; What Now? (7/19/22); Ballotpedia