A judge in Michigan’s Court of Claims held that the state legislature violated the state’s constitution in 2018 when it overhauled voter-approved revisions to Michigan’s minimum wage and tip law and newly created paid sick and safe time law in a lame-duck session, attorneys with Littler Mendelson wrote.
The Michigan legislature in September 2018 adopted as law two ballot measures affecting paid leave and minimum wage. One law entitled virtually all employees — including temporary workers and independent contractors — to paid leave that can be used for “sick” and “safe” time purposes. The other contained a series of annual hikes to the state’s minimum wage, ultimately reaching $12 per hour in 2022.
Under the state’s constitution, qualifying ballot measures must go through the state legislature, which may adopt the proposal as-is, reject the measure and have voters decide, and/or propose a different version for voters to also consider. In 2018, proposals for paid sick leave and minimum wage laws had received enough signatures to be placed on the ballot for the November general election. The legislature, though, adopted the initiatives as written in September.
In December 2018, following the general election, the legislature overhauled the laws, narrowing the employees entitled to paid time off — and how much time they would have to accrue — and extending to 2030 the effective date of the ultimate minimum wage of $12.05 per hour.
Paid leave. Under the initial, ballot-based law, all employees — full-time, part-time, temporary and independent contractors — would be entitled to one hour of paid medical leave for every 30 hours worked, up to 72 hours per year. Employees of businesses with fewer than 10 employees would be entitled to 40 hours paid leave, 32 hours unpaid.
The state revised the law to exempt employers with fewer than 50 employees as well as certain employees such as independent contractors, temporary workers, variable hour employees, certain part-time employees and seasonal employees. It also reduced accruals to one hour of paid sick leave for every 35 hours worked, or 40 hours per year.
Minimum wage. Under the initial, ballot-based law, the minimum wage would rise to $12 per hour by 2022 with the tipped minimum wage rising from $3.75 to $9.60 per hour and up to the regular minimum wage by 2024. Both would move upward at the rate of inflation after reaching their maximums.
Under the state’s revised law, the minimum wage would rise to $12.05 by 2030 and tipped employees would continue to be paid 38% of the minimum hourly wage rate.
The decision. The judge said that the state’s constitution “does not permit the legislature to adopt a proposed law and, in the same legislative session, substantially amend or repeal it,” Littler Mendelson reported.
With the ruling, the laws revert back to the ballot-proposed versions passed in September 2018. The state has filed a formal motion asking the Michigan Court of Claims to put a stay on a decision, Michigan Public Radio reported. Brian Calley, president of the Small Business Association of Michigan, told Michigan Public Radio there should be a stay on the decision while the case goes to the Michigan Court of Appeals and, possibly, the Michigan Supreme Court. “It’s wholly unreasonable to do that in such a light-switch fashion where one day it’s one way and the court expects that the next day it will be another way,” he said.
In a statement, the Michigan Chamber of Commerce said the ruling would have a “crippling effect” on Michigan employers and employees alike. “While we are still sorting through the details, we are stunned by this determination and its many varied implications,” Wendy Block, VP of business advocacy and member engagement, said in a statement. “The talent shortage has employers already paying historic wages and benefits — all while facing rising inflation and supply chain chaos — just to keep the doors open. … We remain hopeful the Court of Claims decision ultimately will be overturned.”