On Friday, Michigan Court of Claim Judge Douglas Shapiro issued a stay order in response to appeals filed by the State of Michigan. The stay was on his ruling two weeks ago holding that the method used by the Michigan Legislature to adopt and amend those laws was unconstitutionally conducted. In staying his ruling, the Judge stated there were “justified concerns” about employer’s ability to accommodate the changes so quickly.

What happened?

Back in 2018 ballot initiatives were submitted by advocacy groups 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 submitted ballot initiatives on paid sick time off was considered too onerous on small businesses.  Under that original ballot initiative, instead of the current 50 or more definition for covered employers, all businesses regardless of size 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 second ballot initiative that was adopted and then amended back in 2018 was to increase Michigan’s minimum wage to $12/hour by 2022.  

Although many in the legislature agreed that there may be need for a state paid time off law, Michigan’s Legislature had to use political maneuvering to amend the bill proposed in the ballot initiative so at least the paid sick leave would apply to larger employers with 50 or more employees, and the minimum wage would be gradually increased over a longer period of time.

Before the ballot initiatives could be voted on by Michigan citizens in the November 2018 election, the Michigan legislature passed (and Governor Snyder signed) the amended laws that now continue in effect until at least February 19, 2023. The 205 days that the judge allowed for the stay has its basis in the fact that this is how long it would have taken the original ballot initiatives to take effect over 2018 and 2019 – 205 days.

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 (AG) 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 a ballot initiative. The Michigan Supreme Court in December of 2019 elected by a 4-3 decision to not rule on the constitutionality of this action at that time. The current Michigan Supreme Court will no doubt get a second chance to look at this case.

What happens now?

This stay does nothing to the appeals that Michigan Court of Appeals now has to take up. Judge Shapiro opined that the appeals were “not likely to prevail on the merits.” If the Court of Appeals does not issue its own stay effective when the Court of Claims stay is over in February, employers will have to come into compliance with the minimum wage law as first passed (before amendment) and for employers over 50 employees modify their paid sick time off policies.

The Michigan minimum wage law would increase the minimum pay allowable to $12/hr. in February, 2023. If that is not enough, minimum wage increase advocacy groups (One Fair Wage and Raise the Wage) have collected enough signatures to put another minimum wage increase initiative on the ballot in November 2024. This time to $15/hr. But for now, Michigan’s minimum wage is at $9.87/hr. and is scheduled to increase again to $10.10/hr. in January 2023.

Under the current paid sick time off law employers under 50 in size get a reprieve for now. Without the stay, small employers in Michigan would have had to implement a costly and complex paid time off policy. It is recommended those employers start preparing for compliance with this new costly benefit for their employees going into effect in February next year.

ASE will keep its members updated as soon as more information develops.

Source: The Detroit News Michigan Judge Delays Potential Minimum Wage Hike Until February 2023. (7/29/2023) Gongwer Court Orders Laws Raising Minimum Wage, Assuring Paid Sick Time Restored (7/19/2022); 1018 Minimum Wage, Paid Sick Time Laws Restored; Now What (7/19/2022) Ballotpedia