Michigan Court Reinstates Scaled Back Minimum Wage and Paid Leave Laws

A three-judge panel of the Michigan Court of Appeals has ruled that the legislature was within its authority when it adopted and then amended ballot initiatives to increase the minimum wage and require paid sick leave. If left standing, the ruling means the minimum wage will stay at $10.10 per hour throughout 2023 and paid sick leave requirements would remain the same as they were in previous years. The plaintiffs are expected to appeal the decision.

The Details

Background

A proposed minimum-wage increase and paid-sick-leave requirement were set to be part of the voter ballot in the general election in November 2018. However, the Michigan legislature stepped in to adopt both measures in September 2018, removing them from the ballot. Because many in the legislature opposed the ballot measures, the passage of the laws was seen as a strategic maneuver to give the legislature a better opportunity to amend the laws and scale them back, which the legislature eventually did with Senate Bill 1171 and Senate Bill 1175 in the same legislative session.

Michigan Court of Claims Decision in July 2022

On July 19, 2022, the Michigan Court of Claims found the legislature’s maneuver was unconstitutional and voided the amended/scaled-back versions of the laws. The decision would have meant the voter-approved versions of the laws would apply. On July 29, 2022, the same court entered an order delaying the effect of its decision until February 19, 2023, to give employers and the state agencies additional time to accommodate the changes. If the decision had been left standing, the minimum wage would have increased to $13.03 per hour on February 19, 2023 and the paid sick leave requirements would have been significantly expanded, including applying to all employers.

Michigan Court of Appeals Decision in January 2023

On January 26, 2023, a three-judge panel of the Michigan Court of Appeals ruled that the legislature had the authority to adopt and amend the ballot initiatives in the same legislative session, reversing the Michigan Court of Claims decision. If the panel’s decision is left standing, the legislature’s scaled back versions of the minimum wage and paid sick leave laws will continue to apply. Under such a scenario, the minimum wage will remain $10.10 throughout 2023 and only employers with 50 or more employees must comply with the state’s paid sick leave requirement. The plaintiffs are expected to appeal the decision.

Next Steps

• Monitor the situation closely for developments, including checking the Michigan Department of Labor and Economic Opportunity’s webpage on the case.
• Consult legal counsel if you already made changes in anticipation of the original laws taking effect on February 19 and now are contemplating reversing them, including consideration of any notice requirements and potential impact on employee relations.