Big Employment Law Changes

In a 4-3 decision last week, the Michigan Supreme Court reinstated two state laws passed in 2018: the Improved Workforce Opportunity Act (IWOWA) and the Earned Sick Time Act (ESTA). IWOWA required significant increases in minimum wages, and ESTA mandated paid sick leave for virtually all Michigan employees.

IWOWA and ESTA were initially passed by the state legislature in 2018 in response to a citizen ballot initiative and then amended to reduce their effect. The reinstated versions of IWOWA and ESTA become effective February 21, 2025 – only six months from now. Here are several key provisions:

IWOWA:

• The minimum wage will initially increase by $2 an hour, plus an inflation factor. The increased minimum is expected to be around $12.50 an hour.
• The minimum will undergo scheduled increases for three more years and may reach $15 an hour in 2028.
• Increases after 2028 will be based on inflation.
• The current minimum wage of $3.93 an hour for tipped employees will also increase annually, beginning at about $6 an hour and reaching 100% of the regular minimum wage by early 2029.

ESTA:

• Virtually all Michigan businesses will be required to provide one hour paid sick leave for every 30 hours worked, subject to an annual maximum.
• The annual maximum for businesses with fewer than ten employees will be 40 hours of paid sick time and 32 hours of unpaid sick time.
• The annual maximum for larger employers will be 72 hours of paid sick time.
• “Employees” under ESTA includes full- and part-time employees, temporary employees, and independent contractors.

IWOWA and ESTA will necessitate, among other things, the updating of company policies and handbooks, employment contracts, and independent contractor agreements. The employment law attorneys at Wright Beamer are well equipped to help you navigate these changes. You can reach us at 248.477-6300.