Developing or integrating your organization’s paid time off to comply with Michigan’s new PTO law

February 22, 2019

By Michael Burns, courtesy SBAM Approved Partner ASE

With the passage of and impending enactment date (March 29, 2019) of Michigan’s new Paid Medical Leave Act, employers that are covered are hastily reviewing their existing vacation, sick, and personal time, as well as formal Paid Time Off benefits and policies to see how far off they may be from compliance with the new law.

If your organization is working on integrating its existing paid time off programs and upgrading them to comply with Michigan’s new law, the following areas should be looked at.

(1) Does your organization employ 50 or more employees?
If yes it must comply with the new law and offer at least 40 hours of paid time off each year for the reasons covered by the law.

There is a rebuttable presumption that an employer is in compliance with Michigan’s new law if the employer provides at least 40 hours of paid leave to an eligible employee each benefit year, including paid vacation days, paid personal days, and other paid time off.

The Michigan Paid Time Off law allows employers to integrate existing paid time off benefits (vacation, sick/personal time off, and the more comprehensive paid time off programs) to comply with the paid time off now required by Michigan law.

(2) Review your vacation, sick/personal time off, or formal paid time off policies.
Chances are your organization’s current policy does not include one or more of the below covered criteria. Your Family and Medical Leave policy may; however, it may or may not provide pay for FMLA time off. That said, many employers covered by FMLA have coordinated FMLA with their other paid time off benefits so that those policies’ paid benefits are exhausted during FMLA leave.

To upgrade your separate or aggregated paid time off policies to comply with Michigan’s law, make sure your policy(ies) covers the following:

Physical or mental illness, injury, or health condition of the employee or his or her family member
Medical diagnosis, care, or treatment of the employee or employee’s family member
Preventative care of the employee or his or her family member
Closure of the employee’s primary workplace by order of a public official due to a public health emergency
The care of his or her child whose school or place of care has been closed by order of a public official due to a public health emergency
The employee’s or his or her family member’s exposure to a communicable disease that would jeopardize the health of others as determined by health authorities or a health care provider
Domestic violence and sexual assault situations
Employers should review their current paid time off (vacation, sick/personal, or paid time off) eligibility criteria and add any of the above criteria for eligibility qualification that is missing to the policy if they intend to coordinate their existing paid time off policies with the law.

(3) What is your paid time off benefit’s accrual method?
Most employers have either a full grant of benefit at the start of each benefit year or have an earned accrual method that accrues the paid benefit pro rata throughout the benefit year. As stated above, Michigan’s law requires an employer to provide 40 hours of paid time off per year. The new law provides for accrual of one hour of paid time off for every 35 hours of actual work. If your policy meets or exceeds the law’s accrual criteria, you are all set.

(4) If your organization’s paid time off benefit is pro rata accrual, does your firm also allow for carryover of unused time off benefits?
Michigan’s new law requires a carryover of unused benefits of up to 40 hours if the employer is on a pro rata accrual method. However, if your paid time benefit provides for a full grant of benefits at the start of the year, carryover is NOT required.

(5) What is the smallest increment your policy’s paid leave allows for payout on?
The new law requires one hour increments; however, if your formal (in writing) policy states another increment that policy can be followed. But keep in mind that employers covered by the FMLA must follow that law’s intermittent time off requirements. Under FMLA, an employer generally cannot require the employee to take more time off than what the employee needs as measured by the lowest time increment that that employer’s payroll system/process allows.

(6) What are your time off notice requirements?
If you have an established notice requirement the Michigan law will allow that notice to be used. The new law requires employers to afford at least three days to provide supporting documentation and possibly longer if police or other reports are not available to support a domestic abuse or sexual assault situation. That said, employers with such requirements should also mind the Americans with Disabilities and FMLA protections.

The above considerations cover most (not all) of the issues a Michigan employer should keep in mind when existing paid time off policies are being reviewed for coordination/integration with the new Michigan PTO law.

ASE has put together a list of FAQs around this new law. It is available here.