Posted: December 19, 2018
On December 14, 2018, Governor Snyder signed into law the Improved Workforce Opportunity Wage Act (the “Wage Act”) and the Paid Medical Leave Act (the “Leave Act”). The Wage Act increases Michigan’s minimum wage. The Leave Act requires employers with 50 or more employees to provide paid medical leave to certain employees. The Wage Act and the Leave Act are the culmination of the Legislature’s effort to minimize the negative impact of two ballot initiatives that would have been placed on the November 2018 ballot, but for the intervening legislation.
Both the Wage Act and the Leave Act (collectively, the “Acts”) will go into effect 91 days after the current legislative session adjourns. Therefore, the anticipated effective date for both is March 20, 2019. With the effective date rapidly approaching, Michigan employers must become acquainted with how these Acts impact their businesses.
The Wage Act
Beginning on the Wage Act’s effective date, employers will need to begin paying non-tipped employees a minimum wage of at least $9.45 per hour. This represents an increase of 20 cents per hour over Michigan’s current minimum wage of $9.25 per hour. Effective January 1 of each year thereafter, the minimum wage will increase by approximately 23 cents per hour until it reaches $12.05. These annual increases will not take effect, however, if the state unemployment rate is 8.5% or higher for the calendar year prior to the scheduled increase.
Tipped employees are to receive an hourly wage that is 38% of the minimum wage.
The Leave Act
The Leave Act mandates that employers with 50 or more employees (“Covered Employers”) provide paid medical leave to “eligible employees.” The Leave Act defines “eligible employees” as those for whom an employer is required to withhold federal income tax – which, of course, is virtually every employee. There are, however, several significant exceptions, most notably:
Eligible employees must accrue the benefit at a rate of at least 1 hour of paid medical leave for every 35 hours worked. However, Covered Employers can limit accrual of paid medical leave for eligible employees to no more than 1 hour per calendar week and can limit both accrual and use of paid leave to no more than 40 hours in a consecutive 12-month period (“benefit year”). In addition, Covered Employers can limit carry over to no more than 40 hours of unused accrued paid leave from one benefit year to the next. The Leave Act defines “benefit year” to mean “any consecutive 12-month period used by an employer to calculate an eligible employee’s benefits.”
As an alternative to the accrual method described above, the Leave Act provides that a Covered Employer “may provide at least 40 hours of paid medical leave to an eligible employee at the beginning of a benefit year.” If a Covered Employer elects to provide paid medical leave in this manner, there is no requirement that it allow any hours to carry over from one benefit year to the next.
Covered Employers are required to pay eligible employees using paid leave at a level at least equal to their base pay, and are not required to pay overtime, bonuses, tips, or commissions when an eligible employee uses paid medical leave.
The Leave Act provides that a Covered Employer must allow an eligible employee to use accrued paid medical leave for any of the following: (1) the eligible employee’s own physical or mental injury or illness; (2) the physical or mental injury or illness of an eligible employee’s family member; (3) the eligible employee’s or his or her family member’s need for counseling, relocation, or legal services relating to domestic violence or sexual assault; and (4) the “closure of the eligible employee’s primary workplace by order of a public official due to a public health emergency,” or the eligible employee’s need to care for a child whose “school or place of care has been closed by order of a public official due to a public health emergency.” The Leave Act’s definition of “family member” does not include an eligible employee’s domestic partner or his or her children or parents.
Covered Employers who already provide paid leave benefits of at least 40 hours per benefit year are allowed to count those hours toward compliance with the Leave Act, so long as the Covered Employer’s existing plan allows for eligible employees to use paid time off for the reasons stated in the Leave Act.
The Leave Act provides employees with the right to file complaints with the Department of Licensing and Regulatory Affairs (the “Department”) within six-months of an alleged violation. If the Department finds a violation occurred, it can award payment to an employee of any wrongfully withheld paid medical leave and can assess up to a $1,000 administrative fine against an employer.
Covered Employers are required to display a poster at their place of business, in a conspicuous place accessible to employees, that includes the following information: (1) the amount of paid medical leave required to be provided to an eligible employee; (2) the terms under which the leave may be used; and (3) the eligible employee’s right to file a complaint with the Department for any violation of the Leave Act. The Department will provide the required posters.
Actions Employers Need to Take
With the Wage Act and the Leave Act taking effect on the 91st day after the current legislative session adjourns, expected to be on or about March 20, 2019, employers need to begin taking steps to familiarize themselves with the new Acts in order to determine what steps may be necessary to ensure that they are in compliance on the effective date. In particular, employers with 50 or more employees will need to review and potentially revise their existing paid leave policy, if any, to determine if it complies with the Leave Act.
As always, the attorneys at Masud Labor Law Group are available to assist you in understanding and complying with the Wage Act and the Leave Act.