A Michigan Supreme Court decision upholds voter initiatives to increase the minimum wage and provide sick leave. Changes go into effect early next year.

A recent Michigan Supreme Court decision reinstates the requirements of two 2018 citizens’ initiatives that phase in wage increases and require accrual of paid sick time. Here’s a top-line look at what employers need to know about the changes that go into effect February 21, 2025.

The Wage Act

The Wage Act has applications for both the minimum wage and employer credits for earnings from tips.

Starting February 21, 2025, the minimum hourly wage will be adjusted from the current $10.33 plus the state treasurer’s inflation adjustment. This could be about $12.58 an hour, as calculated by economist Don Grimes from the University of Michigan. The minimum wage will be adjusted annually for inflation.

Currently, tipped workers earn 38% of the minimum, or $3.93 an hour in wages. The portion of tipped workers’ wages that employers pay is referred to as the tip credit. As of February 21, 2025, the tip credit is increased to 48% of minimum wage.

Over the following four years, the tip credit increases incrementally. Starting February 21, 2029, tipped workers will earn the full minimum wage.

The Earned Sick Time Act

Under the Earned Sick Time Act, employees will accrue paid medical leave. Businesses with 10+ employees are required to provide 72 hours of paid sick leave each year; businesses with fewer than 10 employees must provide 40 hours. The Earned Sick Time Act applies to all employees, including part-time and seasonal workers.

Employees may use their accrued leave to care for their own physical or mental health or that of a family member. If the employee or anyone in their family was a victim of domestic or sexual assault, the sick time could be used for things like court proceedings, counseling and visits.

Employers may require documentation from a health care professional for medical absences of more than three days.

Preparing for the changes

Employers need to prepare for tracking hours and payroll changes. There are many organizations out there who provide these services that you can investigate.

 

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