Increase in salary threshold for "exempt" employees also changes paid sick leave exemption
Michigan employers with 50 or more employees that are covered by the Michigan Paid Sick Leave Law need to know about a recent federal rule change. The U.S. Department of Labor (DOL) made final the Fair Labor Standards Act (FLSA) Part 541 Overtime Rule, and it changes an important exemption provision in the Michigan Paid Sick Leave Law.
On September 24, 2019, the DOL Wage and Hour Division announced the final overtime rule that expands overtime pay eligibility. The rule increases the minimum salary for the “white collar” or “exempt employee” overtime exemption from $23,660 to $35,568 annually. This means that employees making under $35,568 per year will now be eligible for overtime pay and not be exempt from the Michigan Paid Sick Leave Law.
Here’s what that means for small business owners in Michigan. If you have 50 or more employees that are covered by the Michigan Paid Sick Leave Law, your employees that are currently exempted as managers or salaried employees must now meet the higher $35,568 salary level to continue that exemption. Small business owners in Michigan have until January 1st of 2020 to comply with the new federal rule. The rule also requires Michigan small business owners to pay time-and-a-half rates to employees who work more than 40 hours and make less than $35,568 per year. Keep in mind that there are other criteria to meet the federal overtime exemption than just the salary test, however the salary level is the most common criteria.
Meanwhile, on the the state level, the status of the current Michigan Paid Sick Leave Law is being challenged in court. The NFIB supported changes made to the law by the legislature in 2018 remain in place until the court decides the issue.
