On January 26, 2023, a Michigan appellate court panel in Mothering Justice v. Attorney General issued a ruling to halt changes to the State’s paid sick leave law and an increase to the State’s minimum wage for hourly workers that were set to go into effect on February 19, 2023. The ruling is the latest development in a saga that has been ongoing for more than four years.
As we’ve previously reported, in 2018, the Michigan legislature adopted two significant voter initiatives: the Improved Workforce Opportunity Wage Act (IWOWA), which increased the State’s minimum wage to $12 an hour by 2022 (and provided for annual inflation increases thereafter), and the Earned Sick Time Act (ESTA), which mandated employers to provide up to 72 hours of paid sick time per year for various types of absences. Before they took effect, however, the legislature amended the voter initiatives in several significant ways. First, the legislature renamed the ESTA the Paid Medical Leave Act (PMLA) and modified the law to: (1) apply only to employers with 50 or more employees; (2) reduce paid annual leave benefits from 72 hours to 40 hours; (3) permit employers to frontload annual paid leave benefits; (4) remove anti-retaliation provisions; and (5) remove an individual’s private cause of action. Second, the legislature amended the IWOWA to increase the minimum wage to $12 an hour by 2030, instead of 2022, remove the additional annual inflation increases, and eliminate the tip credit set to take effect by 2024.
Advocates for the originally drafted voter initiatives swiftly brought legal action against the State, and on July 19, 2022, the Michigan Court of Claims ruled in their favor, finding that the Michigan legislature’s adoption-and-amendment of the two initiatives violated the State constitution’s provision on voter initiatives. As a result, the Court of Claims ruled that the originally drafted versions of the IWOWA and ESTA were to become effective. The following day, the State of Michigan filed an appeal, and a few days after that, the Court of Claims determined that its ruling would not go into effect until February 19, 2023 – 205 days after its ruling, the same number of days between the date the legislature initially adopted the voter initiatives and the date those laws were set to take effect.
In its January 26 ruling, the Michigan appellate court panel unanimously reversed the lower court, finding that the Michigan legislature had authority to adopt and amend the two initiatives. This ruling clarifies that the Michigan legislature has the power to amend any laws it enacts, including citizen-initiated laws, because there are no express prohibitions against adopt and amend laws in Michigan’s constitution.
Plaintiff in the underlying litigation is already mulling an appeal of the Michigan appellate court decision to the Michigan Supreme Court. As things stand now, however, the amendments made to the IWOWA and ESTA are proper and in effect. Thus, Michigan employers with 50 or more employees nationwide must comply with the PMLA, and increases to the State minimum wage for hourly employees will not take effect later this month. As we previously addressed, the PMLA specifically covers all FLSA nonexempt employees who work an average of 25 or more hours per week.
Epstein, Becker, & Green will continue to keep employers updated on these proceedings. In the meantime, it may make sense for Michigan employers to start preparing and budgeting for a potential reversal by Michigan’s Supreme Court.