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Appellate Court Decision on Minimum Wage & Sick Leave Mandates

January 26, 2023

The long-awaited appellate court decision on minimum wage and sick leave mandates was published and as we expected, the Court of Appeals upheld current law. This means that the compromise on minimum wage and sick leave requirements from 2018 stands. The Small Business Association of Michigan was active in this court action in filing an amicus brief with other business organizations to protect small businesses who have seen so many challenges in recent years.  

This decision means that many small business owners can breathe a sigh of relief that the state’s minimum wage, which is already indexed to inflation, will not increase further, the tipped wage system remains intact, and businesses with fewer than 50 employees remain exempt from the minimum paid sick leave requirements. Further, paid sick leave requirements will not be increased and extended to contractors as the overturned court decision would have required. 

At issue in the court decision was not the merits of changing minimum wage or sick leave requirements. Rather, at issue was the method in which the changes were made. The fundamental question is if the legislature has the ability to amend state law if that law originated from a petition drive provided for in the constitution. The decision made it clear in their opening that this matter at hand was not the merits of minimum wage, but the manner in which it was passed. Consider the following quote from the decision: 

“…the underlying policies set forth in the public acts at issue are completely irrelevant to our decision. Whether “the underlying subject matter is taxes, abortions, sentencing of criminals, you name whatever that social issue is, is not relevant to this matter.” 

While the subject matter (employer mandates on wages and benefits) was certainly important to SBAM and our members, process is also important. The state legislative process is the key way that citizens and small business owners can interact with the policy making process. It is important to us that public policies not be made by courts or government agencies who are not as accessible to the public.  

Interestingly, the decision referred back to the Michigan Constitutional Convention of 1963 where a prohibition of the method used by the Legislature was proposed and rejected. Had the framers of the Michigan Constitution intended to prevent the legislature from amending statute that originated via petition, they would have adopted, not rejected that provision. Consider this quote from the decision: 

“As we have attempted to make clear, the absence of any prohibition on the Legislature amending initiated laws during the same session, the delegates rejection of that exact limitation for voter-approved initiated laws, the inclusion of this exact prohibition for laws approved through a referendum, and the otherwise broad power of the Legislature to act, compel the conclusion that the Legislature is not prohibited from amending an initiated law enacted by the Legislature during the same legislative session.” 

Underscoring the clear nature of the legal case, the decision included a concurring decision where Judge Michael Kelly (one of three appellate court judges on this case) criticizes the action the legislature took in 2018, but agreed that it was permissible under the language of the constitution. 

Finally, there was one additional nugget that might have more ramifications later. A separate concurring opinion written by Judge Riordan lightly weighed in on a long-standing legal argument over whether Attorney General opinions have binding power over state departments, the Governor, or the Legislature. That is very much an open legal question, though Judge Riordan seems to suggest the power of those decisions is something less than binding. 

We at the Small Business Association of Michigan see our work as critical in all three branches of government and are here to serve and defend you. Our policy position on these matters is clear, whether we are talking with the executive, legislative or judicial branches of government: Government should refrain from interfering in the relationship between employees and employers. 

We do expect this decision to be appealed to the Michigan Supreme Court. 

You can view the Court of Appeals decision here: 

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