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Michigan Supreme Court to Decide Fate of Minimum Wage and Medical Leave Laws

In December 2023, the Michigan Supreme Court heard arguments in a case, Mothering Justice v. Attorney General, that could lead to an increase in Michigan’s minimum wage and the imposition of new paid sick leave requirements on most Michigan businesses.

The case relates to 2018 ballot initiatives organized by Michigan One Fair Wage and Mothering Justice—one to increase the minimum wage and the other to require employers to provide paid sick leave to their employees. 

In the summer of 2018, the Michigan legislature was presented with the two ballot initiatives. The legislature enacted both initiatives and then immediately amended them. The legislature’s actions had the effect of preventing voters from voting on either the original ballot initiatives or the amended versions passed by the legislature.

The legislature’s authority to “adopt and amend” the initiatives in the manner it did was then challenged in a lawsuit brought by the ballot initiative organizers.

The plaintiffs asserted that the legislature unconstitutionally amended the minimum wage and earned sick time laws that were previously adopted through a ballot initiative, arguing the legislature had to wait until the next legislative session to take such action, per the Michigan Constitution.

The Michigan Court of Claims agreed with the plaintiffs,and reinstated the original Improved Workforce Opportunity Wage Act (IWOWA) and Earned Sick Time Act (ESTA) adopted in 2018. The Michigan Court of Appeals then reversed the Michigan Court of Claims decision.

The case was then appealed to the Michigan Supreme Court to decide whether the ballot initiatives, as originally adopted, should take effect, or whether the “adopt and amend” actions taken by the legislature should stand.

So what will the impact of the court’s decision be on Michigan business owners?

On January 1, 2024, the minimum wage increased from $10.10 to $10.33 per hour, and the tipped employee rate for hourly pay increased to $3.93 per hour. If the court sides with the legislature, those minimum wage levels should remain in place. However, if the court rules in favor of the plaintiffs, then minimum wage levels will increase, and a new paid sick leave law will take effect requiring nearly all Michigan employers to allow employees to accrue and use paid sick time (pending any further legislative action). 

But for the Court of Appeals overturning the Michigan Court of Claims decision, the state’s minimum wage would have increased to $13.03 per hour and the tipped minimum wage would have risen to $11.73 per hour.

Some of the issues that are unclear, should the Supreme Court rule in favor of the plaintiffs, is when an increased minimum wage would take effect, whether it would be applied retroactively, and whether the legislature would take any additional action.

We will continue to keep you apprised of this case and any further developments.

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