Michigan wage and sick day rules: 5 things to know about proposed changes

• Michigan GOP-led House poised to vote on business-backed plan to scale back pending rules for minimum wage, paid sick leave
• Plan would raise minimum wage but retain ‘tipped credit’ for restaurant workers and exempt many businesses for sick leave mandate
• Senate Democrats have alternative proposal, meaning negotiations are likely before any legislation reaches Gov. Whitmer’s desk

LANSING — Michigan workers are poised to see minimum wage increases and guaranteed paid sick leave next month under court-ordered rules, but the state's Republican-led Legislature is racing to change the laws before they take effect.

Last year's ruling by the Michigan Supreme Court means the state's minimum wage would rise to nearly $15 an hour by 2028, a lower wage for tipped workers would be phased out and all businesses would be required to provide paid sick leave, among other things. 

Business groups and restaurants contend the laws are onerous and could cause them to either raise the costs of their services or go out of business altogether. Unions and workers rights groups, meanwhile, say the change would guarantee sick leave for the bulk of Michigan workers while working toward a livable minimum wage. 

House Republicans are set to vote as early as this week on proposed changes they contend would create a more workable framework for both businesses and tipped workers. Senate Democrats have an alternative plan but have not yet begun debate.

Either way, lawmakers are up against the clock if they hope to send Gov. Gretchen Whitmer legislation to circumvent the court’s decision, which becomes law Feb. 21. Here’s what we know of those plans so far.

Min wage would go up, but tipped credit would not

Regardless of what lawmakers choose to do between now and next month, Michigan’s $10.33 an hour minimum wage will increase. 

The House GOP plan would increase the minimum wage to $12 an hour this year, a small decrease from the $12.48 an hour wage called for under the state Supreme Court decision.

The minimum wage would then continue to increase in future years, reaching $15 an hour by 2029, slightly higher than the $14.97 required by the court. 

The court order, which updates a 2018 petition drive that lawmakers weakened at the time, would also require the state to phase out its tipped credit – a lower wage floor for restaurant workers that is currently set at $3.93 an hour, or 38% of the standard minimum wage. 

The House GOP plan would preserve the tipped credit, keeping it at 38% percent of the standard minimum wage. 

Wage changes for minors

The House proposal would also change court-ordered rules that would raise a lower minimum wage for minor employees under the age of 18. 

Current law requires minors be paid at 85% of the standard minimum wage, or $8.78 an hour. Changes introduced and quickly approved last week by Republicans and Democrats on a new House panel would drop that rate to 75% of minimum wage.

Asked about the change, Rep. Bill G. Schutte, R-Midland, framed the change  to reporters as a “still a 20-cent increase” for minors, since the minimum wage will go up.

Under the plan, this year’s minimum wage for minors would hit $9 an hour — up from the current $8.78 but down from the $10.61 rate that would otherwise take effect next month. 

Most businesses would be exempt from paid sick leave

In addition to the wage changes, House Republicans’ package would dramatically expand who’s exempt from new paid sick leave rules. 

The Michigan Supreme Court order will require businesses with 10 or more employees to provide up to 72 hours of paid sick leave each year. Smaller firms would need to provide up to 40 hours of paid sick time.

But under the House plan, all businesses with fewer than 50 employees would be exempt from the new rules. That means more than 260,000 small businesses, which collectively employ 1.2 million workers, would not be required to provide paid sick leave. 

For firms with more than 50 employees, the revised rules would include:

• Frontloading: Allow paid time off to be frontloaded for the year rather than accumulated over time. If block leave at the beginning of the year is offered, employers would not be required to calculate and track the employee’s accrual of leave.
• PTO Accrual: Let employees accrue at least one hour of paid earned sick time for every 30 hours worked, should their employer choose not to frontload earned sick time.
• PTO Cap: Allow employers to cap paid sick leave at 72 hours, even if an employee accrues or carries over additional time.
• Firing, rehiring: If an employee was fired or quit, but then rehired by their employer within a six-month period, they would still be entitled to previously accrued sick time under the package.

No call, no show rules

Another part of the House package would tackle perhaps one of the more contentious parts of the court’s decision: allowing for no-call, no-shows. 

Should the court’s ruling take effect as written, employees could ostensibly not show up for work without calling their employer for up to three consecutive days. Employers could not discipline employees for those absences, which business owners say would significantly hamper their ability to manage staff morale and payroll.

The House package would do away with the provision, allowing employers to discipline employees who miss work without adequate prior notice.

Senate Democrats have an alternative plan

Senate Democrats proposed their own changes to the pending sick leave and wage changes earlier this month, though their plan differs from the House GOP measures in some notable ways, including:

• Sick leave: Businesses with 25 employees or fewer would be exempt from new sick leave laws — which would scale back the law significantly but not as far as the House GOP plan. 
• Staffing ratios: If a business or organization has mandated staffing ratios, that organization's human resources policy would take precedent over the court’s ruling to let employers know of an absence within seven days or as soon as foreseeable.
• Minimum wage: Minimum wage would rise to $15 on a tiered schedule by 2027, one year earlier than the court’s order and two years ahead of Republicans’ plans. 
• Tipped credit: The state’s tipped credit would be retained, but Senate Democrats call for increasing it from 38% of the standard minimum wage to 60% by 2035 on a tiered schedule.

The Senate has yet to hold a hearing on the legislation.