Editor’s Note: This article should be read consecutively with Amy Drumm’s Seeking Implementation Changes on Paid Leave article.
On July 31, 2024, in a 4-3 decision, the Michigan Supreme Court ruled in Mothering Justice v Attorney General that the Michigan Legislature’s adoption of a ballot initiative and subsequent amendment in the same legislative session was unconstitutional. As a result, beginning Feb. 21, 2025, employers must offer paid sick leave to all employees and the minimum wage in the state of Michigan will increase gradually through 2028. This result disrupts the concept of a market-driven economy, will have a significant negative impact on businesses, including retailers, as well as employee leave policies, and will likely result in layoffs and closures, particularly in the hospitality industry.
The paid sick leave requirement will apply to all employers, regardless of size and include all employees, including temporary and part-time employees and independent contractors. Employers with fewer than 10 employees are required to offer 40 hours of paid leave and 32 hours of unpaid leave. Those with 10 or more employees must offer 72 hours of paid leave. The leave may be used in increments of less than one hour, requires little to no advance notification, and employers cannot require documentation unless the leave exceeds three days. Further, the leave time can be used for a myriad of non-medical purposes including care for family members.
The minimum wage increase requires further clarification, but the court has ordered the implementation of the increase contemplated in the original ballot initiative, adjusted for inflation. The implementation will occur over four years, ultimately resulting in a minimum wage of approximately $15.00 per hour in 2028 and a phasing out of the tip credit over a six-year period. This constitutes an increase of approximately 45%.
The court’s ruling is unfortunate for two reasons. First, the legal reasoning is flawed because nowhere in the Michigan Constitution does there appear a prohibition on the legislature’s action. Second, businesses, employees, and the economy are going to suffer with less flexibility in leave offerings and shuttered businesses and layoffs due to the increased cost of doing business.
Fortunately, the issue has not reached its endpoint. The battle now shifts from the courts back to the legislature. The MRA legislative team is working diligently with others in the business community to make several key changes to the law before Feb. 21.
Thomas Clement
Chief Operating Officer and General Counsel
Michigan Retailers Association
