Michigan’s new paid medical leave act – Public Act 369 – goes into effect on March 29, 2019. This act requires employers to provide paid medical leave to their employees for personal and family health needs.

Originally, this proposal was going to be on the November 2018 general election ballot. But, Michigan’s Legislature chose to adopt the proposal, make amendments, vote, and ultimately pass the act on Dec. 14, 2018.

It’s important to note that this is being reviewed in Lansing, but you should start preparing for the rules of this act. We expect any changes made in Lansing will be more generous for employees, not less. These are likely the minimum requirements of this act.

It’s best to begin complying with this law now and asking for help or clarification where you need it. Here’s a rundown on the key items in the act.

What are the basic provisions of the act?

Simply put, Michigan businesses must provide one hour of paid sick leave to nonexempt employees for every 35 hours they work – up to 40 hours.

If you have fewer than 50 employees, you aren’t required to follow the act.

There are two ways you can award medical leave time to your employees.

1. Accrual method

Employees can accrue up to 40 hours of paid sick leave each year. They begin earning time on their date of hire, but you can require them to work for 90 days before they can use their time.

You can also limit their accrual to one hour per week. You don’t have to allow employees to use more than 40 hours of their paid sick leave in a single benefit year.

If you choose to use the accrual method, you do have to allow them to carry over at least 40 hours from one benefit year to the next.

2. Front-loading method

In this approach, you can provide the 40 hours at the start of the year to avoid any carryover. And, you can pro-rate the awarded time for new employees. The act assumes you’re complying with the law if you provide the hours annually.

The 40 hours you award can be in one bucket that groups paid vacation days, personal days, and sick time together. Or you can split the time between PTO/vacation and sick time.

Either way, you must allow your employees to use 40 hours of that award for medical leave.

No matter which method you choose, employees must use the time in one-hour increments unless you have a different policy documented in your employee handbook.

How do I know if I’m required to provide paid medical leave?

Determining whether this law applies to you is critical. The act says you should count all your employees – part-time and full-time – to see if you meet the 50 employee threshold.

Even if they aren’t eligible to receive paid medical leave, they still factor into your employee count. If you have fewer than 50 employees, you’re not required to follow this law. If you have 50 or more, you’re required.

One piece of the act isn’t clear – whether employees that work outside of Michigan count toward the 50 employee limit. This is yet to be determined. Talk to your labor attorney to help you answer this question.

Please note, you can continue to require your employees to follow your normal notice policies under the act.

Do all my employees get paid medical leave?

Not necessarily. Generally, if you withhold an employee’s tax for federal income tax purposes, he/she is eligible to get the 40 hours of paid medical leave and use it.

There are 12 employee exemptions. The most notable and maybe most widespread exemptions include:

• An individual who’s exempt from overtime requirements
• An individual whose primary work location isn’t in Michigan
• An individual who’s paid the youth minimum wage or training wage
• Temporary employees (as defined in Section 29(1)(l) of the Michigan employment security act)
• A seasonal employee who’s employed for 25 weeks or fewer/less in a calendar year
• A variable hour employee
• A part-time employee who worked fewer than 25 hours per week in the preceding calendar year

If you’d like to know the other employee exemptions, you can find them at the Michigan Chamber of Commerce’s site or by reading Public Act 369.

What should I do now?

First, read through the act to understand it in its entirety. It covers key terms, who is family, when employees can use their time, employer violations, fines, and more.

Second, evaluate your paid time off policy. Are you already complying with this act? If so, no changes are required on your end.

If you aren’t already complying and are required to provide paid medical leave, make the necessary changes to your PTO policy and accruals before March 29, 2019. If you have a payroll provider, connect with them to make these adjustments.

This act gives you the opportunity to review your current policy. Is it working for you? Is your current policy difficult to administer? Do employees understand the way it’s structured?

Should you make larger changes that might better serve your organization, employees, and compliance with this law?

Third, the act requires you display a poster at your business that’s accessible to employees. Michigan’s department of licensing and regulatory affairs (LARA) will provide this poster to you or you can contact your payroll provider.

The poster will outline the amount of paid medical leave you’re required to provide to eligible employees, the terms on which leave can be used, and your employees’ rights to file a complaint if you violate the act.

Finally, it’s recommended that you keep one year of records that document the hours your employees work and the paid medical leave they take.

Remember – this act just establishes a minimum of paid sick leave time. You’re allowed to provide more if you wish.

One last thing! If a paid medical leave mandate is enacted at the federal level, this act will no longer be effective as soon as the federal mandate goes into effect. Currently, there are no federal legal requirements for paid sick leave – only unpaid sick leave under the Family Medical Leave Act (FMLA).

This act is set to go into effect on March 29, 2019.

UPDATE! Michigan’s Supreme Court is going to hear oral arguments on whether the Legislature could amend this law and the minimum wage increase law. The oral arguments are scheduled for July 27, 2019. If changes occur based on the outcome of the Supreme Court’s review, it’s more likely the law will scale up from this version.

You should begin taking the appropriate actions to comply with this act now. We’ll keep you notified of any changes.

Have more questions? Want to connect with a payroll provider to help manage your PTO tracking and accruals and compliance with this act? Let’s talk!