Potential Changes Coming to Michigan Minimum Wage and Paid Sick Time Laws

Michigan employers should begin preparing for significant changes in Michigan’s minimum wage and paid sick leave laws that are scheduled to take effect on February 19, 2023. The scheduled changes will require employers to provide additional sick leave to employees, raise the minimum wage, and phase out the tip credit for tipped employees. While a court challenge to these changes is still pending, Michigan employers should be ready to be in compliance given the rapidly approaching deadline.

On February 19, 2023, absent a further stay by the Michigan Court of Appeals, the original 2018 versions of the Earned Sick Time Act (ESTA) and the Improved Workforce Opportunity Act (IWOWA) go into effect. Please see our previous alert on the issue here for more details on this issue. 

Under ESTA, Michigan law will require that:

• Employers who employ more than 10 employees must provide 72 hours of paid earned sick time per year to employees who work at least 20 calendar workweeks in a year;
• Employers who employ less than 10 employees must provide 40 hours of paid earned sick time and 32 hours of unpaid earned sick time per year to employees who work at least 20 calendar workweeks in a year; and
• All employers must allow employees to accrue earned sick time at the rate of 1 hour for every 30 hours worked.

Under IWOWA, Michigan law will require:

• Increasing the non-tipped minimum wage to $13.03 per hour for 2023;
• Setting minimum wage increases adjusted to the consumer price index each year beginning in 2023; and
• Increasing the minimum wage for tipped employees to 90% of the minimum wage in 2023 and to 100% in 2024 and thereafter, phasing out the “tip credit” often used for tipped employees.

We will continue to monitor any actions taken by the Michigan Court of Appeals, but now is the right time to start thinking about what changes will be required for your business. If you have any questions about the minimum wage or paid sick time laws, please contact your relationship attorney or one of Honigman’s Labor and Employment attorneys.