The Michigan Supreme Court is currently considering action that would increase the minimum wage, change paid sick leave requirements, and eliminate the tipped wage altogether. A negative decision from the Court would primarily devastate the restaurant and service industries, but effects would reverberate across all fields and would hurt small business owners, consumers, and service workers, alike. The Court will reach a final decision on this case sometime between now and the end of June. If the Court rules negatively, SBAM will be working with lawmakers to find solutions that lessen these consequences for Michigan’s small business owners.

There is a continued effort in Lansing to increase Unemployment Insurance maximum benefit amount and weeks of eligibility. House Bill 5827 (Whitsett) would increase maximum benefit weeks from 20 to 26 weeks of eligibility. Other discussed changes seek to increase the maximum benefit amount from $362 per week to $602 per week, with an automatic annual increase. These proposed changes would only further exacerbate ongoing talent shortages in a time when Michigan’s workforce participation rate is relatively low and employers struggle to fill essential positions. SBAM is also concerned that the Unemployment Insurance Agency (UIA) has not yet successfully addressed systemic fraud issues within the UI system and has not restored the 100% employer funded UIA trust fund to pre-pandemic levels. Business owners trust the UIA to be good stewards of their funds, and efforts to increase amount and duration will make that job impossible. SBAM will vehemently oppose any benefit amount or duration increase until concerns are resolved.

Michigan law requires that all rules pertaining to labor regulations be set at the state level, which sets a consistent regulatory framework across the entire state. Bills currently under consideration in the House and Senate would allow Michigan’s 1,800+ local units of government to enact their own regulations governing minimum wage, sick leave, and other labor requirements. For small business owners, who seldom have the time or resources to closely track the ever-changing whims of local officials, this bill would destabilize and complicate the environment in which they do business. Additionally, for owners operating multiple locations in different municipalities, this bill would require them to remain complaint with a complex patchwork of different, sometimes overlapping, regulations.

While legislators have mostly tabled discussions on paid leave for now (they are awaiting a study that has been commissioned to be released in Fall 2024), it wasn’t long ago when the Governor and legislative leaders were listing the issue as a top priority. SBAM continues to monitor a particular legislative proposal that would create a new multi-billion-dollar program requiring all employers to facilitate up to 15 weeks of intermittent paid medical leave per year. The program would be funded through a payroll tax, similar to the current unemployment system. This program would not only raise taxes on employers and employees but also move business decisions away from HR departments and business owners, and into the hands of the state government. 

Proposed legislation would allow the state government to have significant oversight over schedule making in the retail, hospitality, and food service industries. House Bill 4035 would require employers to post schedules 14 days in advance and includes a variety of other new rules for employers. Under this bill, employees could not be required to work shifts that were not scheduled two weeks in advance and would still have to be paid in full if their shift was called off, or if they were sent home from their shift early. Momentum behind the idea has stalled for now, but SBAM continues to watch it closely because of the serious impact it could cause.

A bill that recently passed in the State Senate would significantly expand prevailing wage requirements for small business owners. If the bill becomes law, the Department of Labor and Economic Opportunity (LEO) would create a project registration system and payroll database for all contractors and subcontractors who work on State projects, including certain wind, solar, and energy storage projects. Contractors who bid on these projects would be required to register with the department and submit payroll records. These bills double down on previously enacted anti-small business laws and make it even more difficult and burdensome for small businesses to compete for state projects. The bill awaits hearing in the House.

A recently proposed bill in the House would create a new mandate for all employers that do not currently offer retirement benefits to their employees. The program would require employers to facilitate a state-administered IRA program for qualifying employees. SBAM’s position is that mandates are harmful and costly for small businesses and are not effective solutions. This program provides no additional value or benefit to employees beyond what is already available to them in the private sector. To the extent that the state wishes to be involved in this space, they should work to provide quality options for small business owners rather than force them to administer this program.

Michigan’s current workers’ compensation system is a no-fault system, meaning employers are shielded from employee lawsuits in exchange for their prompt payment of wage loss and medical benefits for anyone injured at work, regardless of who was at fault. Michigan’s law is used as a model across the country. While no official bills have been introduced in the legislature to change that system, conversations have been gaining traction. These discussed changes would allow injured employees to bring a civil lawsuit against their employer in certain circumstances, exposing employers to significant litigation. Potential changes could also soften work requirements while increasing weekly wage loss benefits, resulting in drastic increases in workers’ compensation insurance premiums and putting Michigan at a competitive disadvantage.

Last year, there was concerning momentum around House Bill 4390, which would implement a California-style “ABC Test” in Michigan. That bill would severely limit the use of independent contractors in the course of everyday business. While this bill appears to be shelved for now, SBAM is also concerned about an effort to codify recently implemented Department of Labor contractor standards into state law. These regulations are typically a ‘pendulum issue’ that change depending on which political party holds the White House. Enshrining current standards in state law would lock Michigan into the current restrictive, subjective standards, and would set Michigan’s business behind other states.

House Bill 4681 and Senate Bill 329 would create new restrictions for auto, property and casualty, and workers’ compensation insurers that require them to pay claims in a timely manner, oftentimes before they have full time to investigate. While the stated goal of this legislation is to disincentivize delayed payments from insurance companies, the language in this bill would expose insurers to a litany of lawsuits where they will be forced to pay high settlements and plaintiff legal fees. These costs will be passed down to ratepayers in the form of higher premiums. Other states who have pursued similar legislation have seen drastic increases in frivolous lawsuits and higher prices for consumers.