Michigan Court Ruling Casts Doubt on Paid Sick Leave Exclusion for Temporary Employees

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In 2018, the Michigan legislature adopted two proposed voter initiatives that were scheduled to be on the ballot to raise the state minimum wage and impose new paid sick leave requirements. By adopting the initiatives in statute, the legislature effectively precluded them from appearing on the ballot and being voted upon.

After adopting the initiatives, the legislature promptly amended the provisions to mitigate their effect on businesses. The minimum wage, which was slated to increase to $12 in 2022, was changed to phase in gradually over eight years. The paid sick leave provision was amended to, among other things, exclude employers with fewer than 50 employees and to reduce the annual leave requirement from 72 hours to 40 hours.

Pro-worker groups filed suit challenging the amendments as unlawful. On July 20, a Michigan Court of Claims judge agreed—ruling that, in adopting and amending voter initiatives in the same legislative session, the legislature violated procedures set forth in the state constitution.

The ruling has potential implications for temporary staffing agencies. In addition to amending the paid sick leave headcount and hours requirements, the legislature also excluded various categories of employee from its provisions, including temporary employees employed by staffing agencies. The meaning of the exclusion was the subject of some confusion, but after review, the Michigan Department of Labor and Economic Opportunity confirmed in a 2019 policy update that the leave mandate did not apply to employees assigned to staffing firm clients, as urged by ASA.

The court’s ruling casts doubt on whether the blanket temporary employee exclusion will survive. That’s because the ruling reinstates the original paid sick leave voter initiative adopted by the legislature, which did not include such an exclusion. Fortunately, however, it does include a 90-day waiting period before accrued sick leave can be used, as do most state paid sick leave laws. Thus, if the court’s ruling is upheld, staffing agencies operating in Michigan would have to provide paid sick leave, but only after an employee has worked at least 90 calendar days.

Commentators and business groups say an appeal of the ruling is likely, but it is unclear what businesses’ compliance obligations are in the meantime. The Department of Labor and Economic Opportunity is reviewing the ruling and is expected to issue guidance regarding compliance.

ASA will keep members operating in Michigan apprised of developments as they unfold.

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