Join us for “How to Comply with the Earned Sick Time Act: A Guide for Michigan Small Businesses” on January 9th at Noon.
Upcoming Webinar
Small Business Owner Guide to New Minimum Wage and Paid Sick Leave Requirements
Beginning February 21, 2025 all small businesses operating in the State of Michigan will be subject to new minimum wage and paid sick leave requirements. Looking for tools to help you navigate these changes? SBAM is diligently working on templates and checklists for small business owners – stay tuned for updates in January.
These rules are the result of a decision by the Michigan Supreme Court on July 31, 2024.
New Rules for Michigan Small Businesses
Barring a legislative solution, starting on February 21, 2025, all employers in the state of Michigan will be subject to new rules on minimum wage, paid sick leave, and tipped wages.
Minimum Wage Increase
Michigan’s current minimum wage is $10.33/hour. This decision sets a new schedule for increases in the minimum wage, but the calculation set forth is very complex.
Original Year | Original wage | Adjustment Value | New Year | New Wage | New Tip Wage |
2019 | $10.00 | 1.24752 | 2025 | $12.48 | 48% |
2020 | $10.65 | 1.24752 | 2026 | $13.29 | 60% |
2021 | $11.35 | 1.24752 | 2027 | $14.16 | 70% |
2022 | $12.00 | 1.24752 | 2028 | $14.97 | 80% |
Elimination of the Tipped Wage
Michigan law allows employers to pay tipped employees 38% of the minimum wage as long as they earn at least the standard minimum wage with tips included. Most end up earning far more than minimum wage, which is why recent surveys show that 83% of servers do not want the system to change.
Under this decision, the tipped wage will be phased out and service workers will fall under the regular minimum wage system.
Let’s stand with Michigan’s tipped workers—tell your legislators to keep the system that works!
New Accrual Based Sick Leave Requirements
This decision from the Court requires all employers, including those with fewer than 50 employees, to offer accrual-based paid sick leave to all employees, including part-time. It will require nearly every employer to make changes to the way they accrue sick time. View this grid to read the specific requirements.
UPDATE: The Department of Labor and Economic Opportunity released updated FAQs in November on the Earned Sick Time Act.
What Can We Do?
Seek a Legislative Solution for ESTA
When the legislature reconvenes in January, our top priority will be advocating for common sense changes to the Earned Sick Time Act.
Additional Resources
On-Demand Webinars & Briefings
SBAM’s Special Briefing
On August 1, 2024 SBAM President & CEO Brian Calley hosted a special member briefing.
Webinar from Warner Norcross + Judd
Allyson Terpsma, Partner with Warner Norcross + Judd, presented this webinar on August 8th.
Earned Sick Time Act FAQs (out of date)
SBAM’s Brian Calley and Kelli Saunders walk through these FAQs to help small business owners understand the ESTA and how to be compliant.
Please note that this presentation will not reflect the updated FAQs from LEO listed here.
Media Coverage
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- Detroit News
- Crains GR
- Bridge MI – What to know about Michigan’s pending minimum wage changes
- Capitol Confidential – Walth creators stung by Michigan minimum wage ruling
- Mlive – Michigan’s minimum wage will top $12 next year as high court reinstates 2018 ballot initiatives
- TV 6 (UP) – Michigan Supreme Court ruling to raise minimum wage
- Michigan workers to see new sick time requirements next year
- Created Equal: How Michigan Supreme Court’s ruling on minimum wage, sick leave will affect workers and businesses
Why Is it Changing?
Prior to the 2018 election, advocates introduced voter initiatives mandating employer-provided paid sick time and a $12 per hour minimum wage. These proposals gathered requisite signatures to appear on the 2018 ballot. However, Michigan’s Constitution mandates that initiatives amending statute first appear before the legislature prior to appearing on the ballot. The legislature adopted the proposals and later amended them to lessen the impact. This action, now called “adopt and amend,” prevented the original proposals from appearing on the ballot. Those who gathered initial signatures filed a lawsuit and raised the legal question of whether a legislature can amend a voter-initiated statute that it adopted within the same two-year legislative term in which it was adopted.
The trial court found in favor of the plaintiffs, saying the ‘adopt and amend’ practice was unconstitutional. The court of appeals disagreed and upheld the practice. The final decision rests in the hands of the Michigan Supreme Court, who announced Wednesday, July 31, 2024, that the legislature’s actions were unconstitutional, meaning that the initially adopted ballot language is now law.