Michigan Employment Law Essentials
Michigan employment law is comprised of a complex web of common law, statutory, and regulatory provisions spread literally across dozens of statutes administered and enforced by several agencies. The general rule in Michigan is "at will" employment – meaning that unless otherwise contracted, employees are hired for an indefinite period and may be terminated at any time for any reason . Specific employment protections are provided under state and federal anti-discrimination (generally enforced by the Michigan Civil Rights Commission and United States Equal Employment Opportunity Commission) and wage and hour statutes (generally enforced by the Michigan Wage and Hour Division and United States Department of Labor). Remedies for violations include administrative fines, back pay, front pay, reinstatement, compensatory damages, emotional damages, attorney fees and costs, and punitive damages.
The following is a summary of some key Michigan employment law regulations:
Employment at Will in Michigan
At-will employment is the legal doctrine which forms the foundation of the employment relationship in Michigan. Unless a contract specifies otherwise or an employee is covered by a union contract, he or she is considered to be hired on an at-will basis. In general terms, this means that an employer is not required to keep that employee on staff, and employees are free to quit their jobs at any time without any consequences for doing so. Neither can be sued if the relationship ends, as both parties are free to quit or fire at any time for any reason at any time.
Exceptions to at-will employment do exist, of course. An employee retains the right to speak out publicly about illegal matters such as discriminatory practices, abuse of any type or safety hazards within the organization. If the employee is terminated for exercising these rights he or she may have a cause of action against that employer.
There are certain limitations to the at-will employment doctrine. For example:
Classifying an employee as at-will does not mean that employer has carte blanche to fire that employee, however. An employee may have a claim if discrimination was involved in the decision-making process. This means that if an employee has been with a company for 20 years and has received several promotions, it is not legal for someone to simply come in and fire him or her because that person "just doesn’t like [him or her]."
Employee relations is an important aspect of every workplace. Employees who feel comfortable with and invested in their employers are more likely to be productive, encouraging business growth and increasing employee retention rates.
Wages and Overtime in Michigan
While there are federal wage and hour laws with which Michigan employers need to comply, there are also laws in Michigan which set the four corners for compliance with federal law. Minimum Wage Laws. Michigan law, at Mich. Comp. Laws Sec. 408.381 et seq. establishes its own minimum wage rates.
Overtime Laws. Michigan law, at Mich. Comp. Laws Sec. 408.384 et seq., establishes its own overtime rates. These rates typically are significantly lower than required by federal law. In Michigan, employers generally are not required to pay an employee overtime merely because the employee works over 40 hours in a week. With limited exceptions (e.g. certain health care facilities), Michigan law does not require employers to pay nonexempt employees overtime premiums. Overtime compensation is only required under Michigan law when: 1. An employee works over 48 hours in a week while the employer is in a particular industry. 2. The employer and employee agree upon a workweek of more than 40 hours, a workday of more than eight hours, or other conditions requiring overtime. 3. If the employer and employee have agreed upon a workweek of 48 hours or less, the agreement is deemed to be as effective as the law. Additionally, even if an employee is exempt from overtime eligibility under federal law, that does not mean the employee is exempt from overtime eligibility under Michigan law. Thus, an employer whose employees are among those that are exempt under federal law will want to consider the state exemption rules. See Mich. Comp. Laws Sec. 408.412.
Miscellaneous Wage and Hour Laws. Employers with workers in Michigan who are covered under federal wage and hour laws need also comply with Michigan minimum wage, overtime, and other miscellaneous wage and hour laws. For example, Michigan law dictates an employee’s meal and rest breaks, payment for time spent in training, and payment of wages upon termination. Michigan law does not allow for "comp time" in lieu of any hours worked over 40 in a particular work week.
Michigan Employee Rights
Employee rights and protections in Michigan extend beyond the rights provided by a contract of employment. These rights create protections from discrimination or harassment based upon legally protected classification. In Michigan, these classifications are sex, race, disability, religion, national origin, age, height, weight, marital status, genetic information, and a number of other categories under both the Michigan Occupational Safety and Health Administration ("MiOSHA") and Michigan’s Elliott-Larsen Civil Rights Statute.
In addition, employees of Michigan and political subdivisions, such as counties, townships and municipalities are protected against Whistleblower Termination. The Whistleblower Protection Act protects employees from discharge when the discharge is motivated, at least in part because the employee reports or is about to report violations or suspected violations of law. This protection from discharge is more than just protection from wrongful discharge. The statute provides that an employer can be liable for 3 times the amount of back pay owed, reinstatement, fringe benefits, compensatory damages, reasonable costs and attorney fees.
The Whistleblower Act does not apply to political appointees, judges or legislative employees. Other exceptions to the Whistleblower Act are law enforcement agencies and high level employees within public agencies.
Benefits and Time Off Laws in Michigan
Employment benefits include health insurance, retirement plans and other items of value paid or provided to employees. Employers should have clear, written employee benefit plans that set forth the eligibility requirements and rules for obtaining benefits.
Although Michigan law requires certain benefits to be provided by all employers, both public and private, most employee benefits are voluntary and optional to the employer. An employee’s right to certain benefits may also be established through a collective bargaining agreement.
Family and Medical Leave Act
Most employers must provide eligible employees leave under the Family and Medical Leave Act (FMLA), which provides covered employees with unpaid, job-protected leave for specified family and medical reasons with continuation of health insurance coverage.
Michigan Paid Medical Leave
For Michigan employers, paid medical leave is required under the Paid Medical Leave Act (PMLA). As of March 29, 2019, Michigan employers who are at least 26 weeks in business, with 50 or more employees within the state of Michigan, are required to provide their employees with paid medical leave. Accordingly, employers with less than 50 employees are exempt from providing paid medical leave under the PMLA .
Paid medical leave can be used for a number of qualifying events, including personal illness or injury, as well as the illness of a family member, including:
Unlike the FMLA, the PMLA does not require employers to provide paid medical leave for employees who are caring for a covered servicemember or service member in need of leave related to the exigencies of military service. However, qualifying employees who meet the eligibility requirements of the FMLA are entitled to up to 12 weeks of unpaid leave under the FMLA for the serious health condition of the employee or the employee’s family member, as defined in the FMLA. This leave under the FMLA is in addition to the leave time provided under the PMLA.
Paid medical leave accrued under the PMLA does not carry over into the following year if that leave is not used. However, accrued paid medical leave may be carried over so long as the total accrued paid medical leave does not exceed 40 hours.
Accrued paid medical leave is generally paid to employees at their current hourly rate of pay, excluding overtime. If an employee receives compensation that is not hourly based, then the employee is entitled to compensation equal to the average 40-hour weekly rate in the 12 month period preceding the date of the leave.
Michigan Worker’s Compensation Laws
Michigan employers must comply with the Michigan Workers Disability Compensation Act ("WDCA"). The WDCA provides for a no-fault insurance system that obligates employers to pay injured employees’ medical bills and a portion of their wages (up to 85 percent) for periods when the employee is unable to work due to a workplace injury. Employers are required to have workers’ compensation insurance through a licensed insurance carrier or through self-insurance.
Within 28 days after an employee has an injury or disability that may require medical treatment and lost time from work, the employer must either pay the amounts owed to the employee or send the injured employee a written notice denying liability and payments. In addition, employers must immediately authorize a treating physician to commence treatment. An employer’s delay in authorizing a treating physician can result in sanctions. Under no circumstance may an employee treat with his own choice of physician. If the employer provides health insurance coverage, then the employee must utilize that health insurance coverage for all treatment unrelated to the work injury, including initial emergency treatment.
Employees must give notice of the injury to their employers as soon as practicable after the accident. If an employee does not give notice as soon as practicable, the injury may be disallowed.
After giving notice, the employee must file a claim form within two years of the date of injury or within six months of the last payment of wage-loss or medical benefits, whichever occurs later. If the employer fails to provide benefits and does not properly send notice to the employee, the employee is not required to file a workers’ compensation claim within the statutory time period. The employee should consult with an attorney experienced in workers compensation cases for further advice.
A dispute can arise over the extent of injury, medical treatment, causal connection of the injury, the ability to perform work, the type of work that should be performed, the amount of wage loss, and the extent of wage loss. Most disputes can be settled by the parties or resolved by the Michigan Workers Compensation Agency ("WCA"). The WCA makes determinations of benefit entitlement if the parties are unable to resolve disputes among themselves.
The Michigan Compiled Laws Annotated cites the statute’s express language and contains summaries of cases interpreting the law. An employee is eligible for benefits if the employee was "injured" and the injury arose out of and in the course of employment. An employee is injured and entitled to workers compensation if a work-related injury arose out of and in the course of employment.
Hiring, Firing, and Severance in Michigan
Terminations & Severance Laws
Although Michigan is an "at will" employment state, meaning an employer can terminate an employee at any time for any lawful reason, the circumstances surrounding a termination can result in liability for the employer. The most notable example is where the termination is deemed retaliatory. Although retaliation isn’t strictly defined under Michigan law, it generally means that the employee is terminated for, or as a result of, exercising some legal right, such as filing a complaint, testifying against the company, or asserting some employment-related right under the law (i.e., filing a discrimination claim).
Therefore, even though a terminations may be warranted, an employer must ensure that the termination does not also interfere with some other legal right the employee may have. For example, if the employee filed a complaint with a state or federal agency, such as the Equal Employment Opportunity Commission (EEOC) or Michigan Department of Civil Rights, it may prompt a retaliation claim. For this reason, it is advisable to avoid any termination while a claim is pending with the EEOC. Even if the EEOC has determined there is no merit to the claim, terminating the employee during that process may still give rise to a retaliation claim. Therefore, it is important for employers to evaluate every termination to ensure it does not give rise to some other legal claim (i.e., constructive discharge). Because many employees are employed pursuant to an employment agreement, collective bargaining agreement, or some other contract setting forth the terms of employment, any termination must also be evaluated under the terms and conditions of that agreement or contract.
Beyond ensuring a termination does not give rise to a claim by the employee (or former employee), employers must also evaluate whether their own policies and procedure and past practices may also give rise to an employment claim. This requires the employer to examine its own policies and procedures, and past practice, in evaluating the employee and the contemplated termination. For example, if the employer has reduced pay for other employees within a particular department, or through a periodic pay reduction due to market conditions, the employer must analyze why these actions were taken. If they were not applied to the subject employee, this may give rise to two claims: 1) discrimination – if the employee can establish other employees, who are similarly situated, were treated differently; and 2) retaliation – if the employee can establish he or she was treated differently because of a prior EEOC claim, for example.
Severance Agreements
Notwithstanding an employer’s right to employ its employees at will, almost every employer chooses to grant severance to departing employees in certain situations. In fact, most employers’ personnel policies specifically so provide, often subjecting the employee to a host of requirements in order to become entitled to severance. In collective bargaining situations, the employer must be careful to not adversely affect the terms and conditions of employment, the union, or the bargaining unit, and must usually bargain with the union members over the amount of severance, so long as the severance is delayed until the next contract period.
Because of the above, every severance policy should contain specific examples of the circumstances and conditions under which severance will be granted. It should provide that severance is not an entitlement, but rather, is a matter that can be granted solely on the discretion of the employer. Also, the policy should provide that the receipt of severance is conditioned upon the employee signing a release of claims, releasing any and all known or unknown claims against the employer, its directors, officers, employees, agents, affiliates, subsidiaries, insurance carriers, etc., as well as the terms and conditions of the severance program itself. The release should ideally have a list of all of the various types of claims the employee may have against the employer, or its directors, officers, employees, agents, affiliates, subsidiaries, insurance carriers, etc., such as under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Employee Retirement Income Security Act, the Family Medical Leave Act, the Michigan Persons with Disabilities Civil Rights Act, and Michigan’s Elliott-Larsen Civil Rights Act, along with the workers compensation laws, general release, etc. The release should also state that the consideration is given in full and final satisfaction of any claims the employee might have against the company. Lastly, the release should grant the employer the right to offset severance for any money the company believes is owed to it, such as unreturned property, unearned commissions, overtime compensation, etc.
Of course, every severance program is subject to the same requirements of any related offer of employment by the employer, i.e., discrimination under the Age Discrimination Employment Act as codified under the WARN Act.
Laws, Resources and Compliance
Various agencies provide online resources, manuals, and other guidance in plain English to assist in achieving compliance with Michigan law.
The Department of Labor and Economic Opportunity is a state agency that provides information and resources for Michigan employers, from human relations commissions to labor standards and workplace safety. Its website, michigan.gov/leo, includes anti-discrimination resources, minimum wage, workplace safety information, and more, for both employers and employees.
The Workplace Safety and Health Division under the Michigan Occupational Safety and Health Administration has an overview of its enforcement policies and procedures. This document lays out the enforcement policies, procedures , scheduling systems and priority setting in Plain English.
For information about Michigan’s unemployment tax system, Michigan employers can visit the Unemployment Insurance Agency site. The site also includes forms and instructions for filing claims electronically.
Michigan’s civil rights anti-discrimination law is enforced by the Michigan Civil Rights Commission. The Commission’s website includes policy statements on responsibilities under the law, investigator training materials, and administrative position statements. Also available on its website are fact sheets outlining various employment-related civil rights laws: The MCRC preserves, protects, and safeguards the right of individuals to be free from discrimination in employment, affordable housing, public accommodations, and laws governing education or public service.