If Pain, Yes Gain—Part 103: Blast to the Past: Michigan’s Earned Sick Time Act of 2018 To Be Reinstated in 2023

Seyfarth Synopsis:  The Michigan Court of Claims issued a decision that rendered the current version of Michigan’s paid sick leave law unconstitutional and reinstated the 2018 version of the law. Currently, the 2018 version of the law is scheduled to go into effect on February 20, 2023.  

On July 19, 2022, the Michigan Court of Claims decided Mothering Justice v. Nessel, No. 21-000095-MM (Mich. Ct. Cl. July 19, 2022), which will result in substantial changes to the minimum wage and paid sick leave requirements for employers beginning February 20, 2023.

By way of background, in September 2018, the Michigan legislature approved a ballot initiative, known as the Michigan Earned Sick Time Act (“ESTA”).  The initiative, which was scheduled to go into effect on April 1, 2019, required employers statewide to provide employees with earned sick time for certain covered absences.  Since ESTA was adopted by the legislature, as opposed to by public vote, the Michigan legislature reserved the right to amend the law with a simple majority vote before its effective date.  

On December 5, 2018, the Michigan legislature amended ESTA by adopting the Paid Medical Leave Act (“PMLA”), which constituted a major overhaul of ESTA standards.  For example the PMLA reduced the annual usage cap from 72 hours (for large employers) to 40 hours and imposed an accrual cap of 40 hours where there previously was no express accrual cap under ESTA.  The PMLA, rather than ESTA, went into effect on March 29, 2019 and employers have had to comply with the PMLA.

In May 2021, two Michigan employees, two Michigan nonprofit corporations, and the two organizations that circulated the statutory initiative petitions to provide earned paid sick time to Michigan workers filed Mothering Justice v. Nessel against Michigan’s Attorney General.  The lawsuit sought to (1) render the PMLA null and void on constitutional grounds because it amended the proposal that the legislature had adopted during the same legislative session and (2) reinstate the 2018 ESTA.  

On July 19, 2022, the Michigan Court of Claims held that the adopt-and-amend process that the legislature used to enact the PMLA violated the Michigan Constitution and that the original September 2018 version of the sick leave law had to be reinstated. 

The next day, on July 20, 2022, the State of Michigan filed an appeal of the Court’s decision and moved for a stay of the Court’s decision pending its appeal.  Although the Court denied the State’s motion for a stay pending appeal, it stayed the effect of its July 19 decision for 205 days, through February 19, 2023.  The Court reasoned that the time was necessary for employers’ and the relevant state agencies’ ability to immediately accommodate the changes required by the Court’s decision reinstating ESTA.

An expedited appeal of the Court’s decision is pending, so additional updates are likely forthcoming.  As it currently stands, ESTA is set to go into effect on February 20, 2023.

As a reminder, under ESTA, eligible employees accrue 1 hour of earned sick time for every 30 hours worked.  Employers who employ 10 or more employees on their payroll during at least 20 calendar workweeks in either the current or preceding calendar year must permit employees to use up to 72 hours of paid earned sick time per year, while employers with less than 10 employees must permit employees to use up to 40 hours of paid earned sick time per year and up to an additional 32 hours of unpaid earned sick time per year.  Despite ESTA’s 72-hour annual usage cap, the law does not allow employers to cap accrual or carryover of earned sick time.  For more details on the requirements of ESTA, see our prior alert.

Significantly, the Court's decision in Mothering Justice also impacted the minimum wage in Michigan, increasing it to $12 per hour effective February 20, 2023. 

Employer Takeaways

Employers should take steps to comply with ESTA and minimum wage requirements going into effect on February 20, 2023. Here are some steps to consider:

• Review existing policies and practices to ensure compliance with ESTA and the new minimum wage requirement.
• Train supervisory and managerial employees, as well as HR, on the new requirements.
• Monitor the Michigan Department of Labor and Economic Opportunity’s website and Court docket for updates.

We will continue to monitor and provide updates on Michigan paid sick leave developments as the law’s new effective date approaches and on any subsequent changes.

As the paid leave landscape continues to expand, companies should reach out to their Seyfarth contact for solutions and recommendations on addressing compliance with this Law and sick leave requirements generally.  To stay up-to-date on paid leave developments, click here to sign up for Seyfarth’s Paid Sick Leave mailing list.