As we move towards 2025, employers in Michigan are facing significant changes in labor laws, particularly regarding minimum wage and paid leave. These changes stem from a recent Michigan Supreme Court ruling that invalidated amendments made by the legislature to 2018 ballot initiatives. This decision restores the original 2018 versions of the Wage Act and Earned Sick Time Act (ESTA), meaning businesses must make adjustments to stay compliant.

What Employers Need to Know: Michigan’s Paid Leave and Minimum Wage Changes

Minimum Wage Increases: What to Expect

Starting February 21, 2025, Michigan’s minimum wage will rise to an estimated $12.50 per hour based on inflation adjustments calculated by the State Treasurer. This is just the beginning of a series of scheduled increases that will continue annually until 2029. Each year, the minimum wage will be adjusted to reflect inflation rates, ensuring that wages remain in step with the cost of living. For employers, this means updating payroll systems and preparing for higher wage costs in the coming years.

Paid Sick Time: Expanding Coverage and Protections

One of the most impactful changes for businesses will be the shift in paid sick time regulations. The restored Earned Sick Time Act (ESTA) extends paid leave benefits to all employees, regardless of the size of the employer or the employee’s work schedule. Under ESTA, employees will accrue one hour of paid leave for every 30 hours worked, with no cap on accrual, although usage is capped at 72 hours per year for most employers.

Unlike the current Paid Medical Leave Act (PMLA), ESTA broadens the scope of paid sick leave. It allows for time off not only for illness but also for school meetings related to a child’s health and the effects of domestic violence. This means a potential shift in managing time off and workforce availability for small businesses.

Preparing Your Business for Compliance

With these changes taking effect in February 2025, employers must act now. Start by reviewing and revising your employee handbooks, particularly regarding paid leave and minimum wage policies. Ensure that your systems can track accruals and leave usage, especially for salaried employees who may need to be monitored more closely.

Additionally, be mindful that these changes apply to a broader range of workers, including independent contractors and domestic help. As an employer, you’ll need to ensure that everyone on your payroll, even if they are part-time or temporary, is receiving the appropriate benefits under the law.

While the ruling provides clarity, there are still lingering questions, such as how these laws will interact with federal mandates like the Family and Medical Leave Act (FMLA). As we approach February 2025, stay tuned for further updates that may help clarify these areas.

By staying proactive and informed, Michigan employers can navigate these legal changes smoothly, ensure compliance, and provide their employees with fair working conditions.

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