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New court decision could mean increase in minimum wage and mandatory paid sick leave

July 19, 2022

A Court of Claims decision has threatened to strike down legislative changes enacted in 2018 regarding minimum wage and mandatory paid sick time.

The original law would have instituted a minimum wage of $12 per hour by 2022. Therefore, if this lower court ruling stands, the minimum wage in Michigan would jump from $9.87/hour to $12/hour and then be adjusted upward by inflation each year thereafter. Additionally, the tipped minimum wage would be increased to match the regular minimum wage by 2024.

Under the 2018 legislative plan (current law), employers with fewer than 50 employees are not subject to mandatory paid sick leave requirements and employers with more than 50 employees have to provide a minimum of 1 hour of sick leave for every 35 hours worked, up to a minimum of 40 hours each year.

If this lower court ruling stands, the mandatory paid sick leave benefit will increase to 1 hour given for every 30 hours worked up to a minimum benefit level of 72 hours each year with the provision applying to all employers of all sizes, including businesses with fewer than 50 employees.

Court decisions such as this do not take effect for 21 days to allow time for an appeal. The both an appeal and a request to stay the decision until an appeal is finalized is being requested of the courts. SBAM is in full support of the appeal because we believe that the government should not dictate terms of employment to small business owners. It is estimated that the minimum wage decision would directly impact close to 700,000 employees, but the indirect impact on the entire wage scale inside of small businesses could be much bigger than that.

This poses the question of what do small businesses need to do right now in response to this decision? While the answer to this question is somewhat unclear at the moment, we believe that no changes will be required until the regulatory agency that enforces these areas of law provides some direction to the business community. That agency is the Department of Labor and Economic Opportunity. For reference, here are the current published regulations. SBAM will keep our members informed as we know more.

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