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New Minimum Wage and Earned Sick Leave Act

CPAs & Advisors

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Governor Snyder recently signed legislation that will affect most Michigan businesses. Yeo & Yeo wants to keep you informed of changes in Michigan Minimum Wage and the new Earned Sick Leave Act.

Michigan Minimum Wage Increases

  • Requires a gradual increase in minimum wage from $9.25 per hour to $12.05 per hour by January 1, 2030, based on the following schedule:

End of March 2019: $9.45/hour

1/1/20: $9.65/hour

1/1/21: $9.87/hour

1/1/22: $10.10/hour

1/1/23: $10.33/hour

1/1/24: $10.56/hour

1/1/25: $10.80/hour

1/1/26: $11.04/hour

1/1/27: $11.29/hour

1/1/28: $11.54/hour

1/1/29: $11.79/hour

1/1/30: $12.05/hour

  • No inflationary increases.
  • The minimum wage for tipped employees remains tied to 38% of the regular minimum wage rate.*

*Under the law, all tipped employees are guaranteed to make at least the minimum wage. If their tips plus the tipped employee minimum wage does not equal or exceed the regular minimum wage, the employer must pay any shortfall to the employee. Failure to comply results in fines and fees.

Paid Sick Leave

The Act goes into effect in March 2019.

Which employers and employees are exempt?

  • Applies only to employers who employ 50 or more employees.
  • Time begins to accrue on the effective date or date of hire, but the employer may allow new employees to wait 90 days before using their time.
  • Exempts employees exempt from FLSA overtime requirements, private sector employees covered by a collective bargaining agreement, temporary workers, employees who work in other states, independent contractors, variable hour employees, certain part-time and seasonal employees and flight deck, cabin crew and railroad workers. (Note: Part-time is defined as an individual who has worked, on average, fewer than 25 hours/week during the preceding calendar year. Seasonal employee is defined as an individual employed by an employer for 25 weeks or less in a calendar year for a job scheduled for 25 weeks or fewer.)

Accrual and carry-over

  • Employees would accrue 1 hour of paid sick leave for every 35 hours worked, up to 40 hours per year. Allows employer to limit accrual to 1 hour per week. An employer is not required to allow an eligible employee to use more than 40 hours of paid sick leave in a single benefit year or to carry over more than 40 hours of time from one benefit year to another.
  • Employers may provide all 40 hours at the start of a benefit year to avoid carry-over. Can pro-rate time for new employees.
  • The law creates a rebuttable presumption that an employer complies with the law if the employer provides the requisite hours annually. This time can include paid vacation days, personal days and paid time off.

Use and payment of time

  • Time may be used in 1-hour increments unless the employer has a different increment policy and that policy is in writing in an employee handbook.
  • The employer must pay at a pay rate equal to the greater of either the normal hourly wage, the base wage or the applicable minimum wage rate. An employer is not required to include overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece-rate pay or gratuities in the calculation. 

Notification / documentation

  • The employer may require the employee to comply with the employer’s usual and customary notification, procedural and documentation requirements. Employer must give the employee three days to produce any required documentation.

Litigation Support , fines and fees

  • The law creates an administrative process for employees to lodge complaints. The Department must issue a determination upon conclusion of an investigation and inform the employer of its appeals rights. The Department may assess payment of medical leave and back-pay and will serve as the trustee.
  • The law ensures employees are aware of their rights and able to seek relief if they’ve been affected by a violation.

Please contact Yeo & Yeo if you need assistance with implementing these laws into your payroll process.


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