Major Changes in 2023: Increased Minimum Wage and Sick Leave Benefits

January 9, 2023

This past year brought potential changes to Michigan employment law that will significantly level the playing field for minimum wage and sick leave benefits – and most employers will likely need to make policy changes to comply.

Though legal challenges to these new laws continue, they are currently expected to go into effect in February, so it’s important to plan ahead.

Higher Wages

The Improved Workforce Opportunity Wage Act will impact nearly all employers because it applies to those that employ two or more people at any one time in a calendar year. There are several heavy-hitting rules under this act.

  • The minimum wage will increase to at least $12 an hour, with annual inflationary increases based on the consumer price index.
  • Tipping could look different going forward because the law phases out different compensation for tipped employees. Next year, tipped employees, such as those serving in bars and restaurants, must be paid 90 percent of the minimum wage. In 2024, all tipped employees must be paid full minimum wage, boosting their hourly wages more than 250 percent.
  • Most employees who work more than 40 hours in one work week will be guaranteed time-and-a-half for extra hours worked. Exceptions include executive, administrative and professional employees, seasonal and agricultural workers.

More Sick Time

The Earned Sick Time Act also will impact nearly all employers in some way, as it applies to those who employ at least one person. However, it pays to read the fine print.

  • Small Businesses: Companies with one to 10 employees (full time, part time and temporary) must provide one hour of sick time for every 30 hours of work, up to a maximum of 40 hours of paid and 32 hours of unpaid sick time in a year. That means, if an employee uses more than 40 hours of sick time, it will be unpaid.
  • Large Employers: For companies with more than 10 employees, the ante will increase. Employees accrue a minimum of one hour of paid, earned sick time for every 30 hours worked, up to a max of 72 hours of paid sick time in a year.

Earned sick time carries over from year to year and an employer cannot require an employee to search for or secure a replacement worker as a condition for using this time.

Employers must provide a written policy on sick time to employees at the time they are hired. The policy must specify the amount of earned sick time required to be provided, the terms under which earned sick time may be used and how the employer will calculate a year.

Leaves of Absence

Employees will be able to use a leave of absence for more reasons under the new sick time act, including the following.

  • For employee or family member mental or physical illness, injury or health condition, including treatment or preventative care
  • For employee or family member treatment for domestic violence or sexual assault, including obtaining services from victim service organization, legal services, relocation, or participation in legal proceedings
  • Meetings at the employee’s child’s school related to child’s health, disability, effects of domestic violence or sexual assault
  • For closure of place of business or child’s school resulting from a public health emergency

After three consecutive days off, employees could be asked to provide reasonable documentation to prove the leave of absence is being used properly.

With so many changes, employers must maintain payroll records of the total daily hours worked by all employees for three years on a rolling basis. When an employee uses earned time off, it must be recorded in the smallest increment that the employer’s payroll system uses to track absences.

While the impact and timeline of these laws could still change, it is important to get started early to ensure compliance and avoid potential penalties and fines. Oswald can help you understand these changes in employee benefits and how they may impact your business.

For more information, please contact us:

Maddie Ensminger
Sales Enablement Specialist, Employee Benefits
Oswald Companies


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