Michigan Paid Sick Leave and Minimum Wage

December 21, 2018

Updates to Michigan’s minimum wage increases from $9.25 per hour to $9.45 beginning with the amendment’s effective date in 2019.

Update: The Department Licensing and Regulatory Affairs has released an effective date for the recently passed Minimum Wage and Paid Sick Leave laws. This Act will go into effect on March 29th, 2019. The agency has also released the notice poster that employers are required to post and along with a frequently asked questions document.

Please click here for the notice poster and here for the FAQs.

Minimum Wage Increase

Under the new law, Michigan’s minimum wage increases from $9.25 per hour to $9.45 beginning with the amendment’s effective date in 2019.  Additional yearly increases, effective each January 1st, would be as follows:

  • $9.65 in 2020
  • $9.87 in 2021
  • $10.10 in 2022
  • $10.33 in 2023
  • $10.56 in 2024
  • $10.80 in 2025
  • $11.04 in 2026
  • $11.29 in 2027
  • $11.54 in 2028
  • $11.79 in 2029
  • $12.05 in 2030

One important change from the September legislation is that there are no automatic increases tied to the Consumer Price Index.  Each yearly increase takes effect if the state unemployment rate is 8.5% or higher for the calendar year preceding the prescribed increase.  The minimum hourly rate for tipped employees will be 38% of the minimum hourly rate.

Paid Sick and Medical Leave 

The newly enacted “Paid Medical Leave Act” replaces and greatly alters the “Earned Sick Time Act” passed in September.  Below are some highlights under the new paid leave law: 

  • It applies to businesses with 50 or more employees
  • Covered “Employers” must provide eligible employees:
    • at least one hour of paid medical leave for every 35 hours worked (but employers are not required to provide more than one hour of paid leave in a calendar week);
    • at least 40 hours of paid medical leave per benefit year; and
    • allow eligible employees to carry over up to 40 hours of unused accrued paid medical leave from one benefit year to another (or, alternatively, may prohibit carry-over if employers provide 40 hours of paid medical leave to an eligible employee at the beginning of the benefit year)
    • Although eligible employees will begin to accrue paid medical leave upon hire, employers may require an employee to wait until the 90thcalendar day following employment before using accrued paid medical leave.

The term “eligible employees” is defined to include employees for whom employers are required to withhold federal income tax, with several significant exceptions.  For example, the following individuals are excluded and will notbe eligible for paid leave under the new law:

  • employees exempt from statutory overtime under the FLSA because they are employed in a bona fide executive, administrative, or professional capacity, or in the capacity of an outside salesman as defined by the FLSA
  • employees in the private sector who are covered by a collective bargaining agreement that is in effect
  •  part-time workers (those “who worked, on average, fewer than 25 hours a week during the immediately preceding calendar year”)
  •  seasonal workers (those employed for “25 weeks or fewer in a calendar year for a job scheduled for 25 weeks or fewer”).

As was the case under the “Earned Sick Time Act,” businesses with other paid leave policies with as good as, or better terms than those required by the Act are not required to develop an additional sick leave policy.

Notice and Posting Requirements 

Employers must display a poster at the employer’s place of business that includes information on the amount of paid medical leave required under the Act, the terms under which paid medical leave may be used, and a statement that employees may file an administrative complaint for violation of the new law. Official posters will be provided by the Department of Licensing and Regulatory Affairs at no cost to employers, prior to the Act’s effective date.

Thank you for choosing Paylocity as your Payroll and HCM Tax partner.

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.