On September 5, 2018, the Michigan Legislature adopted as law a proposed ballot measure that will require employers to provide their employees paid leave that can be used for sick and safe time purposes. As the bill is currently written, it fails to address key components to paid sick and safe time. Also, a minimum wage law was adopted. The Improved Workforce Opportunity Wage Act provides annual wage hikes to employees. The estimated effective date for ESTA and IWOWA is April 1, 2019. We will update as soon as more details become available for both laws.
Earned Sick Time Act
The ESTA will apply to all private employers employing one or more individuals. Different standards will apply depending on whether an employer has 10 or more, or fewer than 10, individuals on its payroll during any 20 or more calendar workweeks in either the current or preceding calendar year.
Sick Leave Accrual and Entitlement
Employers can comply with the ESTA by providing paid leave (e.g., vacation, personal days, PTO), as long as that leave: accrues at a rate equal to or greater than what the ESTA requires; is at least the same amount; and may be used for the same purposes and under the same conditions. Additionally, for small employers, employees must be entitled to use paid leave before using unpaid leave. Otherwise, employees must begin accruing leave on the law’s effective date or when employment begins – whichever is later – at a rate of at least one leave hour for every 30 hours worked.
As the law is currently written, the ESTA does not contain an annual or overall accrual cap, and just provides that accrued leave must carry over from year to year. The law does not discuss whether employers can frontload sick and safe time at the beginning of a 12-month period.
Under the ESTA, leave can be used to tend to the mental or physical illness, injury, or health condition of an employee or covered relation; medical diagnosis, care, or treatment thereof; or preventative medical care. If an employee or covered relation is a victim of domestic violence or sexual assault, leave can be used for various “safe” time purposes, including:
• to undergo medical care or psychological or other counseling;
• to obtain services from a victim services organization;
• to relocate;
• to obtain legal services; and
• to participate in any civil or criminal proceedings.
Additionally, an employee can use leave if his or her workplace, or child’s school or place of care, has been closed by a public official due to a public health emergency. Leave may also be used when health officials or a health care provider determines that an employee’s or covered relation’s presence in the community would jeopardize others’ health because of exposure to a communicable disease. Finally, employees can use leave to attend meetings at a child’s school or childcare facility related to the child’s health or disability, or the effects of domestic violence or sexual assault on the child.
If the need to use leave is foreseeable, an employer may require advance notice of the employee’s intention to use leave, which cannot exceed 7 days before the date leave will begin. If the need is unforeseeable, an employer may require the employee to give notice as soon as practicable. Whether foreseeable or unforeseeable, an employer cannot require an employee to disclose details relating to domestic violence, sexual assault, or a medical condition as a condition of providing leave.
If documentation is requested, an employer must pay all out-of-pocket expenses an employee incurs to obtain the documentation. If the employee has health insurance, the employer must pay any costs charged to the employee by a health care provider for providing the specific documentation required by the employer.
Notice, Posting and Recordkeeping
At the time of hiring or by April 1, 2019, whichever is later, an employer must provide each employee written notice that includes, at a minimum, all of the following information:
• the amount of leave required to be provided under the law;
• the employer’s choice of how to calculate a “year;”
• the terms under which leave may be used;
• that retaliatory personnel action against an employee for requesting or using leave is prohibited; and
• the employee’s right to bring a civil action or file a complaint with the Department of Licensing & Regulatory Affairs for any violation.
Additionally, an employer must conspicuously display a workplace poster, where accessible to employees, containing the information in the required notice. The notice must be—and the poster should be—in English, Spanish, and any language that is the first language spoken by at least 10% of the employer’s workforce, as long as the department has translated the notice or poster into such language.
Records must be retained for a period of three years.
Improved Workforce Opportunity Wage Act
The minimum hourly wage will increase annually. When the law takes it effect, the minimum wage will rise from the current rate of $9.25 to $10.00. On January 1, 2020, the minimum hourly wage will increase to $10.65, and again on January 1, 2021 to $11.35. Ultimately, the minimum wage will be set to $12.00 on January 1, 2022. Thereafter, every October beginning in 2022, the state treasurer will calculate an adjusted minimum wage rate, which will increase based on the rate of inflation and take effect on the subsequent January 1.
The IWOWA also includes a phase-out of the lower minimum wage paid to service employees who receive gratuities. The minimum hourly wage paid to these workers will gradually increase each year and is scheduled to match the Michigan minimum wage by January 1, 2024. The act also expressly permits voluntary tip pooling.
We are monitoring for amendments the Legislature may propose and/or adopt during the remainder of the current legislative session or in the next term.
Thank you for choosing Paylocity as your Payroll Tax partner. Should you have any questions please contact your Paylocity Account Manager.
This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.