What’s ahead for minimum wage?
ESCANABA — Two controversial bills signed into law recently by out-going governor Rick Snyder that scaled back minimum wage increases and sick leave protections have left many workers and their employers confused about the future as the new year approaches.
Both of the laws come as a response to citizen-initiated proposals that reached the required number of signatures to appear on the November ballot but were squashed by the Republican-led legislature, which passed its own minimum wage and sick leave legislation. The move, decried as unconstitutional by Democrats, stopped both proposals from appearing on the ballot and changed the number of votes needed to amend the laws later from the three-fourths vote of the legislature to a simple majority.
Republicans weren’t shy about their intentions to adopt their own plans and later amend them. It was openly stated when the laws were passed that the legislature would be making major revisions before the year was out.
With the laws set to take effect in 2019 and the new year quickly approaching, Snyder himself vowed not to sign any controversial bills appearing on his desk during his lame duck period but opted to sign the bills only days later.
“The two bills I signed today strike a good balance between the initial proposals and the original legislation as drafted,” Snyder said in a press release issued Dec. 14. “They address a number of difficulties for job providers while still ensuring paid medical leave benefits and increased minimum-wage incomes for many Michiganders.”
Had the minimum wage proposal put forth by the One Fair Wage ballot committee reached the ballot and been approved by voters, Michigan’s minimum wage would have increased to $10 an hour in 2019, $10.65 in 2020, $11.35 in 2021 and $12 in 2022, and tied further increases to inflation. The proposal also would have phased out the lower hourly wage paid to tipped employees, such as restaurant servers, by 2024.
The law approved by Snyder, which takes effect 91 days after the end of the 2018 regular legislative session, significantly scales back that plan. In 2019, minimum wage will increase to $9.45. It will then raise to $9.65 in 2020, $9.87 in 2021, and break the $10 mark at $10.10 in 2022.
In 2030, minimum wage will reach $12.05 — breaking the $12 mark the ballot proposal had hoped to hit in 2022. There are no increases planned past 2030 in the new law.
However, the increases are not set in stone.
If the Bureau of Labor Statistics determines the unemployment rate in the state is above 8.5 percent for the year prior to a planned increase, that increase will be postponed until a year has passed with an unemployment rate below that threshold.
Unlike the proposal, the new law does not phase out the lower pay-rate for tipped workers. Employers will still be required to pay the difference if a tipped employee’s total pay between wages and tips does not meet the standard minimum wage rate, but the minimum base pay for tipped workers is set at 38 percent of the standard minimum wage.
Young workers also face a reduced minimum wage under the law. As part of the law initially approved by the legislature — and not amended later — employers may pay new employees under 20 years of age a training hourly wage of $4.25 for the first 90 days of their employment, and the minimum hourly wage for employees under the age of 18 is set at 85 percent of the general minimum wage. However, any employer who fires or reduces the hours of another employee to pay the lower wage to a young worker is subject to a $1,000 civil fine.
The law also adjusts the state’s overtime pay rules. In lieu of one-and-a-half times their hourly wage, employees can legally be given one-and-a-half hours off for each hour over 40. If an employee later decides they want money instead of time off, the employee can trade in their additional time for wages equal to their regular hourly pay. Workers are also guaranteed to receive that payment if they are terminated or otherwise leave their place of employment.
There are rules to the time for pay exchange, many of which are the responsibility of the employer. Among these, employers must offer at least 10 days leave per year without a loss of pay, keep accurate records of overtime worked, have a written plan for compensatory time, and not use an employee’s choices regarding pay or time off as a condition of employment. Employees themselves must request the compensatory time in writing prior to putting in overtime, and no employee can accrue more than a total of 240 hours of the compensatory time.
While the law lays out the rules for most employees, there are a number of full or partial exclusions for people who work in certain industries or professions. For example, the entire law does not apply to workers employed at summer camps for less than four months, agricultural workers who are contracted for harvesting on a piecework basis, or ice hockey players between the ages of 16 and 21 in a junior ice hockey league. Employees holding public elected office, employees who work at amusement or recreational establishments that aren’t open more than seven months in a calendar year, and farmers — or anyone related to market preparation, transportation, or storage of agricultural products — are exempt from the overtime portion of the law. Certain employees in caregiving industries may or may not fall under the scope of the entire law depending on the terms of their employment.
Sick time law approved by Snyder changes many of the aspects of the ballot proposal put forth by MI Time To Care. The petition circulated by the group required all employers to provide a minimum of one hour of paid sick leave for every 30 hours worked, but set different limits for how much sick time employees were allowed to take during the year based on the size of the business. Employees of small businesses with less than 10 employees were allowed to use a minimum of 40 hours of earned sick time in a calendar and be entitled to 32 additional hours of unpaid sick leave if they accrued more than 40 sick leave hours. Employees of larger companies were allowed to earn and use up to 72 hours of earned sick time per year.
Regardless of the size of the company, sick leave would carry over from year to year under the proposal, but small business employees were still held to the 40 hour use maximum.
Under the amended law, only businesses with 50 or more employees are required to offer sick leave at all. Employees of these businesses can earn one sick leave hour for every 35 worked, but an employer is not required to allow an eligible employee to accrue more than one hour of paid medical leave in a calendar week. Employers may also limit both the accrual and use of hours to 40 hours per year and employers are not required to roll over more than 40 hours of unused time into the next benefit year.
If an employer would prefer to offer medical leave immediately at the beginning of the benefit year — rather than leaving employees with the possibility of no sick time come Jan. 1 of every year — employers may provide a minimum of 40 hours sick leave to an eligible employee at the beginning of the year. Employers may also prorate this amount for hires made mid-year.
Both the initial proposal and the new law allow for sick leave to be used when an employee or an eligible family member is the victim of domestic violence or sexual assault. The time can be used for medical care or counseling, to relocate, obtain legal services or services from a victim services organization, or attend court proceedings. Employers may request a signed statement from a victim and witness advocate, a police report, or a court document showing the domestic violence or sexual assault occurred, but may not request details of the incident. Any information collected in this process must be kept confidential.