Chicago, Ill. (Aug. 1, 2024) - On July 31, 2024, in a long-awaited decision written by Justice Elizabeth Welch, the Michigan Supreme Court ruled by a 4-3 margin in Mothering Justice, et al. v. Attorney General that a pair of citizen-initiated ballot proposals – the Improved Workforce Opportunity Wage Act (the "Wage Act") and the Earned Sick Time Act ("ESTA") – will go into effect on February 21, 2025, as they were initially proposed by the citizens of Michigan and adopted by the Legislature in 2018.
In 2018, the Legislature adopted the Wage Act and the ESTA, both of which were citizen-initiated laws presented to the Secretary of State and Legislature. The Wage Act, as originally proposed, required that the minimum wage reach $12.00/hour by 2022, and called for annual increases adjusting for inflation. The Wage Act additionally mandated the phasing out of the tip credit by 2024. ESTA, as originally proposed, significantly expanded an employer's obligation to provide paid sick leave to its employees. Subject to certain annual caps tied to the size of an employer, ESTA required that an employer grant its employees one hour of paid sick leave for every 30 hours the employee works. ESTA additionally placed limitations on an employer's ability to deny a request for paid sick leave.
However, in the same session in which the Legislature adopted the ballot initiatives, it amended them and made significant changes. This approach was subsequently termed the "Adopt-and-Amend" Approach. The amendments that the Legislature adopted were designed to ultimately achieve many of the same goals that the Wage Act and ESTA sought to achieve, while balancing employers' interest by spreading out the impact over a longer time period.
The Legislature faced harsh criticism for its strategy, and litigation ensued challenging the constitutionality of the Adopt-and-Amend Approach. The case made its way to the Michigan Supreme Court, which has now held that the Adopt-and-Amend Approach violated the state Constitution. The laws as originally proposed by the citizens and adopted by the Legislature will go into effect 205 days after the issuance of the Court's decision with an amended minimum wage schedule.
This delay will provide employers with sufficient time to prepare for this legislative sea change. However, the Court also explained that the Legislature is free to amend the laws in a later session. Nevertheless, unless and until the Legislature amends the law, Michigan employers must take active measures to ensure they are in compliance with ESTA and the Wage Act by February 21, 2025.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
