As covered in the November 21st issue of EPTW, Michigan employers have to monitor what paid time off benefits will be required of them going forward. Will Michigan’s GOP-led legislature repeal the Michigan’s Earned Sick Time Act entirely or just amend it in order to relieve some of its expense to smaller employers? It appears that pro-business parties may just go for amending the law down to some “reasonable” degree.
What if the law does not get substantially changed?
The current law would go into effect 90 days after conclusion of the Legislative Session (approx. March 29, 2019), and if not changed will require 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). This would make Michigan the most generous state in the nation for paid time off. The law allows recognition of an employer’s current paid time off (PTO), vacation, or sick time off benefits but would require increasing it if those benefits were less than the law requires.
The new law also provides for accrual and carry-over from year to year of unused PTO but limits the per-year accrual and use of PTO. If the law is passed as is, employers should check if their benefit includes a PTO bank of at least 72 hours. This may also be accomplished by adopting and integrating vacation/personal time off benefits, so they cover sick days as well.
The Michigan PTO law mandates paid time off to care for family members. Currently, most employer sick policies only provide benefits if the employee alone is sick.
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.
Employers need to review existing paid and unpaid time off (FMLA covered employers), sick and personal time off, and vacation policies to determine how to coordinate existing benefits and time off policies into what the new law requires or what it may be amended to require.
This law may have far reaching implications. For example, employees taking FMLA leave may not be treated differently than those on non-FMLA leave (paid or non-paid), generally speaking. What happens if a paid holiday falls during an employee’s FMLA leave? Is the employee entitled to the paid holiday benefit? If an employer’s policy states an employee is eligible for holiday pay during a paid or unpaid leave, the employer must treat the employee on FMLA the same. 29 C.F.R. §825.209(h)
FMLA leave requires more documentation than Michigan’s PTO law. Michigan’s PTO law as currently written requires documentation if the employee will be off more than three days. Also, if the employee incurs a cost obtaining the documentation, Michigan employers are expected to reimburse the employee.
Under Michigan’s Paid Time Off law could an employer have to pay both PTO as required under the law and holiday pay as provided by benefit practice? In effect an unjust enrichment of double time? Not unless done intentionally, but employers should review all paid time off policies to ensure they properly communicate how the benefit works and how it integrates with other time off policies.
For employers ensuring an existing holiday pay policy coordinates with the PTO, FMLA, and now (if the law goes unamended) the Michigan employer policies, below are some example exception statements applicable to employee handbooks:
In order to qualify for holiday pay, you must meet the following requirements:
- You must be a full-time employee on the active payroll and not on leave of absence, layoff, etc.
- You must have worked the day before and the day after the holiday. Should you be unable to work either of these two days because of illness, satisfactory proof of illness will be required in order to qualify for the paid holiday.
Holiday pay will not be paid to the following:
- an employee who has been on the payroll less than 90 days
- an employee who is on layoff status
- a temporary or seasonal employee
- an employee whose department is not in operation because of a temporary shutdown
- an employee on leave of absence when said holiday occurs
- an employee who requested to work during a paid holiday who refuses to do so
If a holiday occurs within a vacation period, your vacation will be extended by the number of holidays falling during the vacation period or an equal number of vacation days will be carried forward for future use.
For proper FMLA compliance employers are advised to follow the prescribed notice requirements coordinating paid time off benefits with FMLA:
That portion of the family leave of absence that is vacation time and/or sick days will be with pay according to the Company's policies regarding vacation time and sick days. The employee will be notified immediately in writing that the vacation time and/or sick days will be counted toward the twelve (12) weeks of family leave, or twenty-six (26) weeks of servicemember or veteran family leave. If written notice is not given to the employee by the date of expiration of the leave, the leave will not be counted towards the employee's available weeks of family leave if counting it would result in harm to the employee.
As noted in previous articles, ASE is following the progress of amendment to these laws and will report on amendment developments. When both the Minimum Wage and Earned Sick Time laws are finalized, ASE will schedule a Hot Button Briefing to review both laws in their final form.
Additional ASE Resources
ASE Handbook Development - ASE can review or update your current handbook or develop a new one. We can also update specific policies if needed. For more information please contact Mike Burns.
CCH HRAnswersNow – ASE members have access to the CCH HRAnswersNow Virtual Library via their member dashboard. Sample policies are available. ASE members access here.