As of March 2019, Michigan will be the first-ever state to institute a paid sick leave mandate. This Act will have a significant impact on the state’s employers in terms of payroll costs, benefits, and hiring decisions.
The local chamber of commerce describes the new Michigan sick leave law as “the most punitive and aggressive proposal to be pursued in any state to date, especially as it relates to the smaller employer definition, accrual rates, and lack of carve-outs.”
What does all this mean for small businesses? Here’s how the new legislation will affect Michigan business owners.
The new paid sick leave law will require Michigan employers with 50 or more employees to offer their workers one hour of paid sick leave for every 30 hours worked. The Act will entitle all workers to 40 sick hours total each year. It’s important for employers to note that the law applies to full-time, part-time, temporary, and independent contract workers. Michigan employers with 1-49 employees are exempt from this law.
Although this new law is beneficial for employees, it places several compliance (and financial) burdens on employers.
The Michigan sick leave law will require local employers to adjust their policies in several ways. One notable change is that employers (with 50 or more employees) must offer leave to all types of staff, including temps and independent contractors as opposed to past laws, which allowed employers to limit this benefit to full-time employees if desired.
Employers will also need to waive any pre-existing notice policies for sick leave. In 2018 employers were able to implement their own rules, such as a week or two of required notice. Come March 2019, the law will replace all previous policies with an “as soon as practicable” rule. This could essentially mean no leave notice at all. Employers will need to account for short-notice absences to keep operations running smoothly. If your company can’t operate with a staff shortage, develop a shift coverage policy to fill the gaps when employees are out unexpectedly.
Some employers many currently require a sick note from a doctor for each sick day taken by a staff member. The new law can only require documentation after three consecutive sick days. To accompany this change, employers will be held responsible for all fees incurred during sick leave. For example, out-of-pocket costs for providing documentation, attorney fees, or back pay for litigation actions will all fall on the employer.
The Act will require employers to carry-over unused sick time each year as well. They will not be required to pay out unused time, but instead add the hours to the next year’s sick leave, which could result in more than the standard 40 hours. Employers should plan ahead for extra paid sick leave.
These changes mean employers will have to redesign their current sick leave policies to comply with the new law. Beyond policy changes, the Act will force employers to think more carefully about staffing decisions. Payroll, benefit structures, and hiring decisions can become more costly due to these changes. Therefore, employers may have to consider cutting back or restructuring personnel offerings to account for cost increases from the Michigan sick leave law.