One of the most important aspects of running a small business is having employees who show up consistently. In theory it sounds simple, but if you talk to any business owner, they will tell you how difficult this basic concept can be. If you are a business owner in Michigan, you will want to be aware of the new changes made to the Michigan law.
On July 31, 2024, the Michigan Supreme Court, in Mothering Justice v. Attorney General, determined that the Michigan legislature violated constitutional law by using a certain procedure to amend paid sick leave and minimum wage laws. The result of the decision is that the laws will revery back to the original ballot initiative versions. This is significant for business owners because the original ballot initiative differs drastically from current law.
As a result of the decision, on February 21, 2025, the terms of the original ballot initiative versions will be reinstated as law. There are many aspects which will affect small businesses.
First, employers with less than 50 employees must provide paid sick leave. In the old version of the law which has been around since 2019, this was not the case. According to the Small Business Association of Michigan, businesses with less than 500 employees and an annual gross revenue of $25 Million (or a 3-year average of less than $20M) are eligible to be “certified small” by the Association. Thus, if your business falls under these parameters, you must provide paid sick leave starting in February 2025.
Next, all employees who work at the small business are eligible for paid sick leave. Prior to the July ruling, only full-time and non-exempt employees were eligible. Now, all employees are eligible for paid sick leave including part-time, non-salaried, and any/all other types of employees. Additionally, the amount of paid sick leave hours has changed. Prior to the July ruling, employees were eligible for 40 hours of paid sick leave. Now, all employees can accrue up to 72 hours of paid sick leave per year.
The Supreme Court also made changes to minimum wage to account for inflation. Thus, if you are a small business owner, make sure you stay up to date with the most recent numbers. The State Treasurer plans to issue a chart with the update numbers soon. The increase will last through 2028 and will continue to increase with inflation thereafter.
Finally, if you are a small business whose employees receive tips, there are additional changes. Before the recent Michigan Supreme Court ruling, most employees who received tips only received 38% of minimum wage with the assumption that the tips supplement additional wages. But, beginning February 2025, this exception will not be the norm and small businesses, and large businesses, will be required to pay employees the entire minimum wage amount in addition to letting employees retain tips.
If you have any questions on how these changes may affect you, the attorneys at Dalton & Tomich, PLC are experienced in all aspects of business and would be happy to assist you.
