Michigan Paid Medical Leave Act (PMLA) changes are likely to impact your budget and paid time off (PTO) policy, requiring your immediate attention.
The Facts:
- In July, the Michigan Court of Claims ruled the "adopt and amend" strategy used to implement PMLA was unconstitutional.
- The Michigan Court of Claims issued a "stay," meaning a pause in the enforcement of the ruling until 2/19/23.
- An appeal was immediately filed with a hearing date of 12/13/22. No judgement is expected until the end of December or early January.
- If the Court of Appeals sides with the legislature, then the 2/19/23 Court of Claims ruling goes away.
- If the Court of Appeals upholds the Court of Claims ruling, the 2/19/23 enforcement date becomes a reality.
- Many legal experts anticipate the decision going all the way to the Michigan Supreme Court. A Supreme Court ruling will not likely take place before 2/19/23.
- The Michigan Department of Labor and Economic Opportunity (LEO) recognizes that if the Court of Claims ruling is upheld, employers will need a time period (grace period) to become compliant.
- The LEO time period (grace period) for compliance does not negate an employees' private right of action to enforce the new requirements, meaning you could be sued by an employee for being noncompliant.
The current PMLA, which was effective March 29, 2019:
- Requires employers with 50 or more employees to provide up to 40 hours per year paid sick leave to certain employees for qualifying life events (i.e. mental or physical illness or injury of an employee or family member, employee or family member who is a victim of domestic violence or sexual assault.)
- Employers with less that 50 employees were exempt from the act.
The following summary compares the current PMLA law and the Court of Claims ruling, illustrating the differences.
WHAT TYPES OF BUSINESSES NEED TO COMPLY AND WHAT EMPLOYEES ARE ENTITLED TO THE BENEFIT
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Current Law
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Current law only applies to businesses who employ 50 or more individuals.
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All employees must be counted in determining whether an employer meets the 50-employee threshold.
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The law has 12 specific employee exemptions; including exempt from FLSA overtime requirements, private sector employees covered by a collective bargaining agreement, temporary workers, employees who work in other states, independent contractors, certain seasonal and part-time employees, variable hour employees, flight deck, cabin crew and railroad workers.
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What Would be Required if the
Court of Claims Decision is Left
to Stand
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The Act applies to “any person, firm, business, educational institution, nonprofit agency, corporation, limited liability company, government entity or other entity that employs one or more individuals.”
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There are no exemptions for employers with existing paid leave policies or small employers.
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All employers will need to adjust their policies, as leave is available to any “individual engaged in service to an employer in the business of the employer” (e.g., part-time and seasonal employees, exempt employees, temporary workers and even possibly independent contractors).
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The “act provides minimum requirements…and shall not be construed to preempt, limit or otherwise affect the applicability of…a collective bargaining agreement, that provides for greater accrual or use of time off.”
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ACCRUAL AND CARRY-OVER
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Current Law
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The law specifies employees would accrue one hour of paid sick leave for every 35 hours worked, up to 40 hours per benefit year.
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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.
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Employers may provide all 40 hours at the start of a benefit year (front loading) to avoid carry over. Accrual method must allow for carry over of 40 hours per calendar year.
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The law creates a rebuttable presumption that an employer is in compliance with the law if the employer provides the requisite hours annually, specifying that the time provided can include paid vacation days, personal days and paid time off.
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What Would be Required if the
Court of Claims Decision is Left
to Stand
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Employees accrue one hour of paid sick leave for every 30 hours worked under the Act. All employees would be entitled to use 72 hours in a year.
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Employees working for employers with fewer than 10 employees (very small businesses) would be entitled to use 40 hours of paid leave, 32 hours of unpaid leave.
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Although the employer could limit use to 72 hours per year, all time must be carried over from year to year (no cap).
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The Act provides the employer is in compliance “if the employer provides any paid leave, that may be used for the same purposes and under the same conditions provided in this act and that is accrued in total at a rate equal to or greater than the rate described….”
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USE AND PAYMENT OF TIME
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Current Law
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The law specifies time may never be used in one-hour increments unless the employer has a different increment policy, and that policy is in writing in an employee handbook.
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The law also requires the employer to pay at a pay rate equal to the greater of either the normal hourly wage, the base wage or the applicable minimum wage rate.
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An employer is not required to include overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece rate pay or gratuities in the calculation.
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What Would be Required if the
Court of Claims Decision is Left
to Stand
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Leave time can be used in the smallest increment that the employer’s payroll system uses to account for absences (e.g., 6-minute increments).
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The Act specifies “[f]or any employee whose hourly wage varies depending on the work performed, the ‘normal hourly wage’ means the average hourly wage of the employee in the pay period immediately prior to the pay period in which the employee used paid earned sick time.”
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NOTE: It remains unclear as to how time must be paid to commissioned, piece-meal, tipped and other employees with varying wages
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NOTIFICATION AND DOCUMENTATION
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Current Law
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What Would be Required if the
Court of Claims Decision is Left
to Stand
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The Act requires seven days’ notice for use or, if not possible, “as soon as practicable.” This will provide employees 72 hours of no notice leave time.
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An employer can only require documentation after three consecutive days of leave.
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Documentation that sick time is necessary will be limited to a generic statement by a health care professional – nothing more.
- NOTE: Employers are responsible for any payment of the employee’s out-of-pocket costs associated with providing documentation.
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We encourage you to review these changes and compare them to your current PTO policy. In order to be prepared for how your business, policies, and bottom line could be impacted, it is recommended that you budget and plan as if the ruling is allowed to go into effect on 2/19/23.
Koppinger & Associates can help you navigate the complex world of federal and state compliance.
Contact us for solutions to turn confusion into clarity.
