(8-10 minute read)
In lieu of allowing these Acts to become law based on a vote of the people 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, the Earned Sick Time Act (ESTA).
The Legislature also adopted a proposed ballot measure concerning the state’s minimum wage, entitled the Improved Workforce Opportunity Wage Act (IWOWA). This act contains a series of annual hikes to the state’s minimum wage.
If no changes are made the laws would go into effect 90 days after the current legislative session ends, around April 1, 2019. However, this is the other shoe we are waiting to drop. Had these measures passed based by a public vote, the legislature could do little to change them. Because they were passed by the legislature they can now also be amended by the legislature and many expect that to happen during the lame-duck session which starts today.
If Nothing Changes
The Improved Workforce Opportunity Wage Acts (IWOWA) is fairly straightforward, increasing the minimum wage incrementally to $12.00/hour by 2022. The first increase would take effect on the date the law takes effect, moving the minimum wage from $9.25 to $10.00/hour. After 2022, the state treasurer would be required to calculate an adjusted minimum wage rate based on the rate of inflation which will take effect on the following January 1. It would also slowly phase out the lower minimum wage paid to employees that receive gratuities, increasing the rate until it matches the standard minimum wage by 2024.
The Earned Sick Time Act (ESTA) has quite a bit more going on. It 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 (i.e., small employers), individuals on its payroll during any 20 or more calendar workweeks in either the current or preceding calendar year.
Employees are not entitled to use more than 72 leave hours per year, unless the employer selects a higher limit. For employees of small employers however, 72 leave hours breaks down to 40 paid and 32 unpaid hours, and employees may use paid leave before having to use unpaid leave. Leave may be used in hourly increments or the smallest increment an employer’s payroll system uses to account for absences or use of other time, whichever is smaller.
Under 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:
Other uses are also mandated and there is plenty more to both of these Acts, but this is enough to get you up to speed for now…
At this time we do not recommend rewriting your Paid-Time-Off (PTO) polices or planning any wage changes. As the legislature moves into its lame-duck session, all eyes will be on any amendments to both Acts and we will update you once the dust has settled.
We do recommend thinking about any changes you may need or want to make based on the above. One concept to consider, especially if you have separate vacation, sick and/or personal time polices is to combine them into one Paid-Time-Off bank which can be used for all these reasons, plus those specified in the ESTA.
Most paid sick time banks offered by employees would not meet the minimum required, but by combining these banks into a very flexible PTO plan, you can meet your potential obligation without increasing the total amount of time off, and create a time off plan with maximum flexibility for your employees – which is what most of them want anyway – and simplify the administrative burden on you.
November 8, 2018
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