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In September 2018, the Michigan legislature passed two laws – one to modify Michigan’s minimum wage and one to enact paid sick leave. In December, Governor Snyder signed two laws modifying the legislation passed in September. As of February 2019, Michigan Attorney General Dana Nessel (AG) has been asked to review the changes made in December to ensure those changes were made according to Michigan’s constitution, but as of today the new minimum wage and paid medical leave requirements will go into effect on March 29th, 2019. We will provide further communication should the AG review lead to further changes in the law.
Breaking Down the Law
Breaking Down the Law – Minimum Wage
Based on Public Act 368 signed by Governor Snyder in December 2018, Michigan’s minimum wage will increase to $9.45/hour on Friday, March 29, 2019. Provided required conditions are met, future annual increases will take effect from 2019 through 2030 as shown below:
Each annual increase does not takes effect if the average unemployment rate is 8.5% or higher the previous calendar year and does not include automatic increases tied to the Consumer Price Index as originally included in the September legislation.
TIPPED EMPLOYEES: The minimum hourly rate for tipped employees will continue to be 38% of the minimum hourly rate as shown below:
The minimum wage law affects workers who meet current minimum wage eligibility laws. Workers who are minors, seasonal workers or employees in a training wage period are exempt from a wage increase.
Paid Medical Leave Act
In an effort to ensure eligible employees have the ability to earn and use paid sick time to address personal and family health issues, the Michigan Legislature passed the Earned Sick Time Act in September 2018. In December 2018, Governor Rick Snyder signed the Paid Medical Leave Act (PMLA), which took the place of the original Earned Sick Time Act.
The new PMLA law takes effect March 29, 2019, and requires businesses with 50 or more employees to provide eligible staff with the following:
- One hour of paid medical leave for every 35 hours worked, capping out at a maximum of 40 hours of paid medical leave provided per benefit
- The ability to carry over up to 40 hours of unused accrued paid medical leave from one benefit year to
- Paid medical leave is to be paid at the employee’s normal hourly rate or pay or base wage, not including overtime, bonuses, holiday pay, commissions, etc.
Eligible employees include those for whom employers are required to withhold federal income tax; however, there are several types of employees who are excluded and will not be eligible to earn paid medical leave under the new law, including:
-Individuals exempt from overtime requirements under the Fair Labor Standards Act (FLSA)
-Individuals who are covered by a collective bargaining agreement, if they are not employed by a public agency
-Seasonal employees who are employed for 25 weeks or less in a calendar year
-Part-time employees who worked fewer than an average of 25 hours per week during the immediately preceding calendar year.
Paid Medical Leave will begin accruing on March 29, 2019, or an employee’s first day on the job if hired after 03/29/2019. While the paid medical leave will begin accruing on an employee’s first day of employment, employers CAN require employees to wait to complete 90 days on the job before using accrued paid medical leave.
Employers can choose to provide at least 40 hours of paid medical leave at the beginning of the year or when an employee becomes eligible during the year (on a prorated basis). If an employer provides employees with at least 40 hours per benefit year, the requirement to allow employees to carry over unused time is dropped.
Employees may not use more than 40 hours of accrued paid medical leave in one year. Employees who leave or are terminated are NOT required to be paid out for unused accrued leave.
Hours worked does not include paid hours taken off from work (i.e. holiday, vacation, personal time, etc.)
An employer is considered compliant with the PMLA if an existing PTO policy already provides at least 40 hours of paid leave to employees. This can include paid vacation days, paid personal days, or other paid time off.
Paid Medical Leave time accrued must be used in one-hour increments unless an Employer’s handbook or employee benefits documents include a different increment policy.
Employees may request the use of accrued paid medical time for a variety of physical and mental health related issues related to the employee or to his or her family members or if he or she is the victim of domestic violence or sexual assault. Accrued medical leave may also be used if an employee or family members business or school has been closed by order of a public official or if an employee or family member has been exposed to a potentially dangerous communicable disease.
Employers are prohibited from retaliating against staff members who take eligible paid medical leave, must keep all details and records retaining to paid leave confidential, and are required to retain all records documenting the accrual and use of paid medical leave for a period of at least one year.
Communicating with your Employees
Employers must inform employees of all updates and changes to leave policies, including the requirements of Michigan’s PMLA by displaying a poster that includes information on the amount of paid medical leave required under the Act, the terms under which paid medical leave may be used, and an eligible employee’s right to file a complaint with the Michigan Department of Licensing and Regulatory Affairs (LARA) for any violation of the PMLA. Failing to meet the posting requirement may result in a $100 fine per violation.
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