Recently, Lusk Albertson covered the lame duck session in the Legislature that closed out the 2018 year (available at Lame Duck Final, The Developments You Need to Know and Updates from Lansing, Lame Duck Sessions). While there’s certainly a bevy of new laws, two in particular have drawn special attention from school districts – new laws on minimum wage and sick time. Here’s what you need to know:
Public Act 368 of 2018, which impacts minimum wage in Michigan, is relatively straightforward. Titled the “Improved Workforce Opportunity Wage Act” (IWOWA), the law supersedes the Workforce Opportunity Wage Act (WOWA), MCL 408.411 et seq. Under WOWA, Michigan’s minimum wage was slated to climb to $12 by 2022. IWOWA mitigates the yearly uptick in minimum wage. The predicted minimum wage for 2022 is now set at $10.10, with the $12 threshold being reached only in 2030. Even if no new legislation is enacted in the interim, minimum wage isn’t guaranteed to reach that hourly rate. As with WOWA, IWOWA contains language that freezes minimum wage increases if Michigan’s unemployment rate reaches 8.5% or greater. IWOWA also pumps the brakes for tipped workers’ wages, which would have matched the general minimum wage by 2024. Under IWOWA, tipped workers will continue to earn a minimum wage equal to 38% of the general minimum wage.
Public Act 369 of 2018, titled the “Paid Medical Leave Act” (PMLA) and superseding the “Earned Sick Time Act” (ESTA), controls employees’ accrual of sick time. Previously, employees generally accrued an hour of sick time for every 30 hours worked, and they were entitled to use up to 72 hours of sick time per year. Under the PMLA, employees now accrue an hour of sick time for every 35 hours worked, and an employer is not required to allow an employee to accrue more than one hour of paid medical leave per week. Employers are also permitted to limit an employee’s accrual of paid medical leave to 40 hours per year. Additionally, the PMLA allows employers to limit the number of hours that carry over from one year to the next to 40 hours. If an employee carries hours over from one year to the next, and earns more hours in the following year, resulting in more than 40 hours of paid medical leave time accrued, the employer may still limit use of paid medical leave time to 40 hours per year.
Alternatively, the employer may provide 40 hours or more of paid medical leave at the beginning of a year, and may prorate the paid medical leave for employees hired during the year. Under the alternative scheme, the employer is not required to allow the employee to carry hours over from one year to the next.
Regarding paid medical leave pay amounts, an employer is not required to include overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece‑rate pay, or gratuities in the calculation of the employee’s normal hourly wage or base wage, which must be paid during paid medical leave.
The PMLA, in addition to adding and modifying language, also removes certain provisions. Notably, the PMLA removes a provision from the ESTA that entitled an employee to use sick time for meetings at the employee’s child’s school or place of care related to the child’s health or disability, among other things. It also removes language related to domestic partners, and removes children of domestic partners from the definition of a “family member” under the PMLA, limiting when paid medical leave may be taken relative to a domestic partner or child of a domestic partner.
The PMLA is evidently friendly to employers, and its pro‑employer framework extends to enforcement of alleged PMLA violation. Not only are employers who provide at least 40 hours of paid medical leave to employees per year entitled to a rebuttable presumption that they are in compliance with the PMLA, but the PMLA also severely limits the statute of limitations for employer violations, shortening the time to file a complaint from three years to six months. Additionally, the PMLA removes the ability to bring a civil action, instead only allowing relief via the filing of a complaint with the Department of Licensing and Regulatory Affairs. Finally, the PMLA shortens the time period that employers are required to retain documentation for employees’ hours worked and paid medical leave taken from three year to one year.
IWOWA and the PMLA will have a large impact on employers and employees in Michigan. While IWOWA’s changes are fairly easy to understand, the PMLA contains a comparatively large number of intricate modifications, additions, and deletions. Should you have any questions on how IWOWA and the PMLA will affect you, please reach out to legal counsel.