A million Michigan workers may lose sick leave guarantee under House plan

• Michigan’s GOP-led House is set to vote on legislation to alter changes to state sick leave, wage laws coming Feb. 21
• Proposal would exempt more than 260,000 companies employing a collective 1.2 million workers — 1 out of 3 in the state
• Plan would also preserve ‘tipped credit’ for restaurant workers and make other changes to pending minimum wage law

LANSING — More than 260,000 companies collectively employing 1.2 million Michigan workers would be exempt from a pending paid sick leave mandate under legislation set for a likely vote this week in the state House. 

A court-ordered law, set to take effect Feb. 21, would require all Michigan companies to provide workers with at least 40 hours of earned paid sick time each year, or up to 72 hours for businesses with 10 or more employees. 

But legislation backed by new Republican leadership in the state House — and approved last week by several Democrats in committee — would exempt any company with fewer than 50 employees from the new rules. 

That means the vast majority of Michigan businesses would not be required to provide paid sick leave. 

As of last spring, 264,064 out of the 274,480 firms operating in Michigan had fewer than 50 employees, or about 96%, according to data from the state Department of Technology, Management and Budget.

Collectively, those companies employed roughly one 1 of every 3 Michigan workers — 1,207,207 in total.

The paid sick leave mandate, along with pending increases to the state's minimum wage, were first proposed as part of a 2018 petition drive that lawmakers quickly weakened that same year but the Michigan Supreme Court reinstated last summer. 

House Republicans leading the charge to change the laws again contend the rules would be unworkable for many Michigan companies, who have warned they may have to raise their prices — or go out of business altogether. 

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“Business owners — I’ve never seen them so frustrated and scared of the impacts of this and being able to survive,” Brian Calley, president and CEO of the Small Business Association of Michigan, told Bridge Michigan.

But unions, workers’ rights groups and some Democrats contend that employees across the state deserve the higher wage and sick leave requirements set to take effect next month. 

Preemptively dismantling the laws would spit in the face of voters who signed the 2018 petition poised to finally be implemented, argued state Rep. Dylan Wegela, D-Garden City.

“What's best for the state, and the people of Michigan, is to give people the raise that they're entitled to by the decision and make sure that people have paid sick leave,” Wegela told Bridge.

“To me, this is a no brainer.”

No call, no shows

Estimates from 2018 suggest that as many as one-third of Michigan workers are in jobs without a paid sick leave policy. 

Of the workers who do not have paid sick time, they are most likely to be part-time workers, among the lowest paid or working in the hospitality industry, advocates say. 

Calley, head of the state Small Business Association, argues it’s not that owners don’t want to give their employees paid sick leave, it’s just that the wording of the court ruling could cause significant complications.  

As written, the decision will allow for workers to miss up to three consecutive days without calling their employer to explain. It also enables employees to take time off in the smallest amount of increments a business’ payroll allows.

Taken together, Calley said the act could put business owners in a place where employees don’t come to work, forcing others to pick up the slack, worsening team morale.

“Most business owners understand and believe that most employees will not abuse this law,” he said, “but it’s also a fact that some will.”

But Wegela, the Democratic lawmaker, dismissed that argument. 

“I don’t think anyone who cares about their job at all is going to do that,” he said, adding that it was “interesting that the argument is always that workers are going to be the bad actors in these scenarios.”

Ryan Sebolt, director of government affairs director for the Michigan AFL-CIO, also pushed back on the idea that employees simply wouldn’t show up for work, noting the state is already explicitly telling workers to notify bosses of an unforeseeable absence “as soon as practicable.”

After an absence over three days, he added, employers can still ask workers for documentation regarding their sick days. However, if an employer asked for a doctor’s note, for example, they’d have to reimburse the employee for costs associated with the doctor’s visit.

“I get that they want advance notice — and they should, for foreseeable things. That is how the Department of Labor is interpreting the law,” Sebolt said. “But there are also unforeseeable things, so there has to be a balance.”

The House GOP plan

State Rep. Bill G. Schuette, a Midland Republican and chair of the House select committee responsible for advancing the bills last week, said the legislation is about “protecting Michigan’s employees and small businesses.”

Lawmakers and restaurant owners have raised alarms over the pending phase out of the state’s “tipped credit” for restaurant workers, a lower guaranteed rate that would be fully eliminated by 2029 under the court-ordered law. 

The court ruling will also require the state to raise its standard $10.33 an hour minimum wage to $12.48 next month, and to $14.97 by 2028. 

There would be no phase-in for the sick leave rules, however. Businesses would be required to comply by Feb. 21. 

Among other things, the House GOP plan would make it easier for employers to discipline workers who miss consecutive days. 

The proposal to exempt companies with fewer than 50 workers from the new paid sick leave rules would put Michigan in line with Connecticut, which in 2011 became the first of 12 other states to adopt a paid sick leave law, according to the National Conference of State Legislatures. 

The Connecticut statute applies to businesses with more than 50 employees. Several other states, including California and Arizona, also require smaller employers to provide sick leave.

For larger firms in Michigan, the proposed House GOP provisions would also:

• 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.

Employers would additionally not have to extend sick leave offerings to employers averaging fewer than 25 hours per week in the prior year, seasonal workers employed for fewer than 25 weeks and remote workers who may work — but not live — in Michigan.

Charity Dean, founder of the Detroit-based coffee shop Rosa, argues the changes are needed, as the smaller the business, the more difficult meeting the court’s requirements will be. 

Dean, who also serves as the president and CEO of the Michigan Black Business Alliance, is one of the many business owners arguing in favor of the House GOP plan. 

The 2024 court ruling, she said, doesn’t take into account the difficulty of being a small business owner and the struggle that comes with funding changes virtually overnight.

While the minimum wage increases will be tough to afford, they’ll be phased in, but the additional human resources costs for implementing the new sicktime rules will hit immediately, Dean told Bridge. 

“We can create new rules, and we can pass them and celebrate, but I can’t create new revenue,” she said. “Do you want to pay $20 for a cup of coffee?”

What comes next?

While the House is expected to approve revisions Wednesday, the fate of Michigan’s minimum wage and sick leave laws will remain up in the air. 

Senate Democrats, who would have to sign off on any legislation for it to reach Gov. Gretchen Whitmer, have introduced their own proposal that differs from the House plan in several significant ways. 

Among them:

• Sick leave: Businesses with 25 employees or fewer would be exempt from new sick leave laws under the Senate plan — as opposed to the 50 employee threshold proposed by the House
• 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.
• 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. 

The Senate has yet to hold a hearing on their package. When first introduced, state Sen. Sam Singh, a Lansing Democrat and sponsor of a bill within the package, touted the legislation as a way to “ensure workers have the ability to care for themselves when they need to.”

“No one should have to choose between their health and keeping their job or paying their bills. … it’s a policy that’s not just good for workers, but smart for businesses too,” he said in a statement.