In a major decision issued Wednesday, the Michigan Supreme Court reinstated both the Earned Sick Time Leave Act (ESTA) and the Improved Workforce Opportunity Wage Act (IWOWA). As discussed further below, the Mothering Justice v. Attorney General decision will have a significant and continuing impact on all Michigan employers beginning February 21, 2025.
The decision comes after a lengthy court battle that began when the Michigan Court of Claims ruled in 2022 that the Michigan Legislature acted unconstitutionally when it adopted and amended both the ESTA and the IWOWA in the same legislative session in back in 2018. The Michigan Supreme Court took the case after the Michigan Court of Appeals reversed the decision of the Court of Claims in 2023, ruling that the legislature’s ‘adopt-and-amend’ strategy was constitutional after all.
Wednesday, the Michigan Supreme Court reversed the Court of Appeals’ decision and ruled that under the Michigan Constitution the legislature may not adopt an initiative petition and then later amend it in the same legislative session. As a result, the ESTA will be reinstated in its originally adopted form but its provisions will not take effect until February 21, 2025, 205 days after the Mothering Justice opinion was issued. The IWOWA will also be generally reinstated, but its wage increases are modified to start in 2025 instead of 2019.
When the ESTA is reinstated in February of 2025, it will replace the now-voided Paid Medical Leave Act (PMLA) and will make many changes to employer paid-leave requirements. For example, the ESTA and its accompanying mandates apply to all Michigan employers, not just those with 50 or more employees, as under the PMLA. Further, the ESTA requires employers to provide 72 hours of sick leave per year, rather than the 40 hours required by the PMLA. These are only a couple of numerous changes that will be implemented under the ESTA.
The reinstatement of the IWOWA, like the reinstatement of the ESTA, will have a significant impact on Michigan employers. The IWOWA will gradually increase the minimum wage in Michigan each year beginning in February 2025 to mirror the steps that would have taken place beginning in 2019 if the ESTA had been implemented as adopted, with inflation adjustments.
As stated above, the ESTA and the IWOWA will not become effective until February 21, 2025, thus giving Michigan employers 205 days from July 31, 2024, to become compliant with both acts.
