Asked and Answered . . .


Paid Medical Leave Act changes take effect March 29

By Steve Thorpe
Legal News

In December, former Michigan Gov. Rick Snyder signed the Paid Medical Leave Act ("PMLA") which contains significant changes from the original Earned Sick Time Act. The PMLA is now limited in application to employers with 50 or more employees. However, not all employees are covered by the Act. Under the PMLA, employers are required to adopt a policy providing for either accrual of 40 hours of paid medical leave time or by providing 40 hours of paid medical leave time to eligible employees and new hires. The PMLA, as amended, takes effect March 29.

Maureen Rouse-Ayoub is a labor and employment attorney at Varnum LLP’s Novi office. She advises clients on labor management relations, including the development and enforcement of workplace policies, defense of employment-related claims and labor contract compliance. She has extensive experience working with companies in a variety of industries including manufacturing, automotive, logistics and health care. Rouse-Ayoub regularly writes and speaks on a variety of labor and employment topics.

Thorpe: Can you give us background on this ruling and recent changes?

The current PMLA provisions are more consistent with other state laws passed on the same topic including Washington State and the City of Chicago. For example, the original ballot proposal would have permitted employees to accrue up to 72 hours of paid leave in a 12-month period with a one hour accrual for every 30 hours worked. Under the PMLA, the maximum amount of paid medical leave time available to an eligible employee was reduced to 40 hours in a 12-month period, accruing at the rate of one hour for every 35 hours worked. Employers may cap the accrual rate to one hour per calendar week by including notice of the cap in their written policy. Employers also have the option of providing 40 hours of paid sick leave, also known as front-loading, at the beginning of the benefit year, which eliminates the need to track accrual under the Act. Employers that already provide 40 hours of paid leave time, including vacation, personal days, and other paid time off to eligible employees during the benefit year are subject to a rebuttable presumption of being in compliance with the Act.

Other changes to the Act include how employees request and document the need for paid leave. Employers may rely on and enforce their usual and customary notice procedures and documentation processes so long as the employee has a minimum of three days to comply with the documentation request. Other notable changes include the elimination of a private cause of action and retaliation provisions which were included in the initial ballot proposal. Instead of a private cause of action, employees who believe their PMLA rights have been violated are required to file an administrative Complaint with the Michigan Department of Licensing and Regulatory Affairs within six months of the occurrence. The limitations period for filing a complaint was reduced from three years to six months.

Thorpe: Which employers are covered?

The Act applies to all employers who employ 50 or more individuals, defined as persons for whom the employer is required to withhold federal income tax.

Thorpe: Some employees are eligible and some are excluded? How is that determined?

Although an employer may have 50 or more employees and thus be subject to the Act, not all employees are eligible to take paid medical time even though the employer is covered by the Act. Employees excluded from taking the paid medical leave include:

1. Exempt employees excluded from the overtime provision of the Fair Labor Standards Act, including executive, administrative, and professional employees;

2. Employees covered by a private collective bargaining agreement that is in effect;

3. Employees of the United States government, another state, or political subdivision of another state;

4. Individuals whose primary work location is not in the State of Michigan;

5. Individuals 16-19 years of age being paid the youth training wage in accordance with the approved Work Force Opportunity Wage Act;

6. Temporary employees as described in the Michigan Employment Securities Act;

7. Variable hour employees;

8. Employees covered by the Railway Labor Act and the Railroad Unemployment Insurance Act;

9. Individuals employed by an employer for 25 weeks or fewer in a calendar year for a job scheduled for 25 weeks or fewer; and

10. Individuals who worked, on average, fewer than 25 hours a week during the immediately preceding calendar year.

Thorpe: Please explain the difference between existing paid time off policies and paid sick leave.

Many employers have existing paid time off policies. If employers have a policy that provides for 40 hours of paid time off, employers are not required to provide additional paid sick time off and are presumed to be in compliance with the Act. Employers should develop a policy that clearly explains to employees how the employer intends to coordinate its existing paid time off policies with paid medical leave.

For example, an employee taking a 12-week leave under the Family Medical Leave Act would not be entitled to an additional 40 hours of leave time. Instead, the employer’s policy may provide that paid medical leave runs concurrent with the Family Medical Leave Act leave which is generally unpaid. Under this hypothetical, the employee would receive 40 hours paid leave and 11 weeks unpaid leave.

Thorpe: What are the pros and cons of front-loading hours versus accrual?

Employers that choose the accrual method of 1 hour paid medical leave for every 35 hours worked must also allow employees to carry over a minimum of 40 hours of unused paid medical leave time to the next benefit year. The carry over ensures that the employee has paid medical leave time available to the employee at the beginning of the benefit year. Employers that adopt the accrual method may also implement a 90-day waiting period after beginning employment before the employee is allowed to utilize paid medical leave. The frontloading option enables employers to front-load 40 hours of paid medical leave time at the beginning of the benefit year for existing employees and a prorated portion of the 40 paid medical hours to new hires during the year. Under the frontloading option, employers are not required to allow employees to carry time over to the next benefit year. Regardless of the method utilized employers are not required to pay out unused medical leave time to employees at the time of separation. Employers may cap the use of paid medical leave time to 40 hours per year, regardless of the amount of time in the employees paid medical leave bank under both the accrual and front-loading method.

Thorpe: How is an employer’s notice of posting requirements handled?

Employers are required to provide notice to the employees of their rights under the Act. The required posting is available at no cost on the Michigan Department of Licensing and Regulatory Affairs website. However, employers that plan to implement the voluntary provisions of the Act such as capping hours earned to one hour per week or limiting the amount of time to be used to 40 paid sick leave hours in a benefit year should adopt a written policy to be distributed to employees explaining how the Act will work in coordination with their existing policies. The policy should also include an explanation of the employee’s obligations with respect to providing notice of a leave request and any required documentation. The Act requires employers to retain records of paid sick leave use and hours worked for one year.