Feb. 7, 2025 | This Week in Government: Senate Panel Hears Divided Testimony on Proposed Paid Sick Time Fix

The paid sick time law set to go into effect Feb. 21 should be allowed to take effect without changes, supporters of the pending law told senators Wednesday, saying the changes proposed by the Senate would strip the benefits from thousands of Michigan workers.

Members of the Senate Regulatory Affairs Committee heard sharply different pleas from small business owners, who urged for more flexibility under the law in how to provide the benefits as well as to carve out a small business exemption for companies with a certain number of employees.

Sen. Jeremy Moss (D-Southfield), the committee chair, opened the hearing on SB 15 by saying the frustration over the issue is understandable.

“This conversation, this public debate, should have happened years ago back in 2018 when the people of Michigan first made their voices heard on this issue,” Moss said. “At the core of this issue is something simple: making sure that Michiganders can take care of themselves without fear. Fear of losing their job or fear of having to close a family business, and that workers can maintain their place in the workforce with confidence.”

Lawmakers are weighing a potential change to minimum wage and paid sick time law ballot petitions that were adopted by the Legislature in 2018 and later significantly changed during lame duck session that year. After a lengthy court fight, the Michigan Supreme Court last summer ruled that the Legislature cannot adopt a petition and then amend it in the same legislative session.

The court ruling has raised concerns from businesses and business groups over the potential costs the laws in their original form taking effect. Opponents of the minimum wage law have said the changes could cause huge numbers of bars and restaurants to go out of business and lead to significant job losses. The paid sick time law has drawn concerns over implementation and costs to employers.

Supporters of the two laws have said these fears are overblown, will benefit the pocketbooks and health of workers and should be allowed to take effect.

Testimony on SB 15 will be completed at a hearing next week, with testimony also beginning at that time on SB 8, the Senate’s proposed minimum wage law bill.

Sen. Sam Singh (D-East Lansing), sponsor of SB 15, told members there are versions of the paid sick time law in effect in 18 other states.

“What we are talking about here today is not something that’s unique. It’s not something that is new,” Singh said.

SB 15 would change the definition of a small business and a cap on the accrued hours for paid sick time. The bill would retain the upcoming requirement that all employers provide one hour of paid sick time for every 30 hours worked, but it would ease the record-keeping requirements and make it easier for employers to frontload sick time if they wish. It also would allow employers with fewer than 25 employees, instead of the current 10, to offer less paid sick time.

Under the current law to take effect Feb. 21, employers with less than 10 workers would have to provide a minimum of 40 hours of paid sick time (should the employees work enough to accrue it) with the ability for employees to earn another 32 hours of unpaid leave. That threshold would rise to employers of under 25 under the Senate bill.

Instead of the forthcoming law’s minimum of 72 hours of paid leave for employers of 10 and more, that would rise to 25 and up.

The House versions of the minimum wage and paid sick time laws introduced by Republicans are HB 4001 and HB 4002, respectively. They cleared the House with some bipartisan support last month (See Gongwer Michigan Report, Jan. 23, 2025).

Sen. Dan Lauwers (R-Brockway) said he was encouraged by some of the changes included in the substitute, but a small business exemption would be a significant improvement. He said for companies smaller than 25 employees, and especially 10 employees, the costs become difficult to contend with as does the workability of the law.

“I think that would just get all the votes you need for this thing if we had a real small business exemption,” Lauwers said.

To this, Singh said other states have been able to make similar laws work and he believed the right language can be crafted.

Danielle Atkinson, founding director of Mothering Justice, which led the initiative petition for the law set to take effect, said SB 15 is not a starting point for negotiations or a compromise from the ballot measure enacted. The changes to the definition of a small business “would result in the vast majority of Michigan workers not being covered to the extent that they would be covered if the law went into effect on the twenty-first.”

“This bill would only further the disparities in leave by race and by gender,” Atkinson said. “Every time we create exceptions and loopholes for the business, we are hurting very vulnerable populations.”

Atkinson called on lawmakers to let the law take effect and then address any issues later.

Kelly Garrett, president of the Mothering Justice board, said she has had to take care of her sick children in the past and was lucky to have sick time for such occasions.

“Too many parents, caregivers, and workers don’t have that choice,” Garrett said. “They are forced into heartbreaking decisions every day: do I stay home with my sick child, or do I go to work so we can keep the lights on? Do I take care of myself, or do I risk infecting my coworkers, because missing a day’s pay isn’t an option. These aren’t hypotheticals.”

Sen. Dayna Polehanki (D-Livonia) said there are many mothers who are also small business owners, some who might be negatively affected by provisions within the law.

“What would be the problem be with 25 employees?” Polehanki

Atkinson said many of the workers in Michigan who are not covered under existing law would not be covered if it were amended to 25 employees.

David Robb, co-owner of Express Employment Professionals, outlined feedback from clients on the effect of the paid sick time law if left unchanged.

“Impractical, overreaching and devastating. Those are just some of the worlds that employers from Grand Rapids and across the state have used to describe the current sick time act,” Robb said.

Robb said common sense amendments would make the law much more workable for employers.

“They want to support their employees. They want to provide sick leave, paid time off, but they want it in a way that makes sense,” Robb said.

Following the hearing, multiple small business owners outlined their concerns about the law to reporters.

Rod Kloha, owner of Circle K Service Corporation in Midland, called for a small business exemption in the law.

“My company does offer benefits, and we do offer paid time off for my employees that are sick and everything else, and actually, we can be much more flexible than what this mandate or this act is going to allow us to be,” Kloha said. “We are very concerned about this act being put into place and would seriously hope that the Senate can come to terms with the House resolution to modify it, hopefully with a small business exemption because that would really make it possible for us to continue to stay in business.”

Jose Gonzalez, co-founder of Preferred Flooring in Grand Rapids, said he believed the law needs amending to provide more flexibility. He used the example of having someone using paid sick time without any notice. With only 10 employees, any inability to move someone over to another job to cover for a sick person could hurt his business.

“That puts me in a bad spot. I could lose their contract. I could lose the respect and my integrity be questioned as a business owner,” Gonzalez said. “This was intended to help our employees, and I get that, but it does need a little bit of revision to protect employers.”

Several changes were included in an S-1 substitute adopted for SB 15 during Wednesday’s hearing.

The 144-hour carryover cap of unused, accrued paid sick time would remain in place, unless the employer does either of two things. These would be if the employer pays out the sick time or if the employer allows a higher limit of accrual time to be carried over.

Language was also added to help employers comply with the act for sick time that was awarded prior to the law’s effective date.

A provision mirroring Minnesota’s law on paid sick time was also added on notification requirements, stipulating that unforeseen leave requires notice as soon as practical “if specified in written policy of the employer.”

Another change provides language that leave may be taken in one-hour increments or at the smallest possible increment that employer’s system allows.

One request from stakeholders was also included, amending language dealing with multi-employer fringe benefits.

Following the hearing, David Worthams, director of employment policy for the Michigan Manufacturers Association, told reporters the substitute version of SB 15 is a step in the right direction, but more work needs to be done.

“I believe there are some conversations that are going on between House and Senate leadership. I don’t know how those conversations are going,” Worthams said. “I think there’s a very narrow path that something can get done before the twenty-first, a very, very narrow path, but it’s possible.”

Moss told reporters the Senate is being thorough in its approach to the paid sick time and minimum wage laws. He described conversations with the House as ongoing.

“This is kind of the first big test of the Legislature, with the House and the Senate of two different parties of policymaking,” Moss said. “Anything that we pass out of our chamber has to meet their approval, too. We are aware of that. We’re not going to rush anything out that is a partisan vote, that doesn’t get to the governor’s desk.”

As both sets of North American tariffs were postponed Monday from taking effect, Michigan Democrats and various trade organizations continued to emphasize the harm they could have on the state and its industries if they are implemented next month.

Tariffs on Mexican and Canadian imports were held off until March after President Donald Trump, Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum struck deals involving sending 10,000 Mexican troops to the U.S. border and the implementation of a $1.3 billion Canadian border plan.

The stated intent of the 25% blanket tariffs, according to the White House, is spurring action on both the north and south U.S. borders to curb the traffic of illegal drugs, particularly fentanyl.

Republicans cheered the decision to impose tariffs on two of the U.S.’s closest neighbors and allies as a necessary step to slow illegal border crossings and drug movement across both borders. U.S. Rep. John Moolenaar (R-Caledonia) said in a statement Trump is “working to secure our nation’s borders and stop the flow of fentanyl and other dangerous drugs into our country.”

Legislative Democrats and various trade groups disagreed with the White House on the outcomes heavy tariffs would generate, arguing that if they’re allowed to move forward next month, they’ll only serve to impose higher prices on consumer goods and devastate the auto and agriculture industries.

“The tariff war is probably going to hurt Michigan more than any other state in the nation,” Rep. Julie Brixie (D-Okemos) said in a Monday press conference. “We are Canada’s second largest trade partner behind Illinois, and we’re Mexico’s second largest trade partner behind Texas; our reliance on agriculture and manufacturing for our economy puts us in a really unique and terrible position to be fighting with our neighbors on both sides of our borders, over tariffs on things that we rely on for every facet of our economy.”

The Michigan Agri-Business Association said tariffs will hit its members hard and they expressed concern that retaliation from Mexico or Canada could open the door for international competitors to take over foreign markets currently populated by U.S. companies.

“As a border state, leading agricultural exporter, and major North American trade and transit hub, Michigan deeply values our strong, long-term commercial relationships with Canada and Mexico,” MABA President Chuck Lippstreu said in a statement. “We are deeply concerned that across-the-board tariffs risk substantial negative economic consequences for Michigan agriculture and rural communities in our state.”

Michigan exports nearly $3 billion in agricultural and food products annually, MABA said, the number one destination for which is Canada. The U.S. Chamber of Commerce, National Association of Manufacturers, National Association of Home Builders, and the United Auto Workers, among other trade organizations, have spoken out in opposition to the blanket use of tariffs against close trading partners.

“The president is right to focus on major problems like our broken border and the scourge of fentanyl, but the imposition of tariffs … is unprecedented, won’t solve these problems, and will only raise prices for American families and upend supply chains,” Chamber Senior Vice President John Murphy said in a statement.

U.S. Sen. Elissa Slotkin (D-Holly) said the tariffs would essentially function as a handout to overseas automakers, at the expense of manufacturers at home.

“President Trump’s 25% blanket tariffs on all products from Canada and Mexico – and now the retaliatory tariffs thrown back at us – will do real harm to middle class families. Best estimates are that the average Michigan family will pay $1,200 more per year because of this blanket approach,” Slotkin said in a statement. “After hearing from our automakers and suppliers, it’s clear that the impending trade war is a gift to foreign automakers. Cars assembled in Japan, Korea, or Germany will be cheaper than the cars assembled in North America by the Big Three.”

Over the weekend, Canadian Prime Minister Justin Trudeau promised retaliatory action specifically targeted at Republican-controlled U.S. states if the tariffs take effect, leaving experts and policymakers alike stunned at the possibility of a trade war between the U.S. and its ally to the north. To hold off the tariffs, Trudeau ultimately agreed to appoint a fentanyl czar and join a U.S.-Canada Joint Strike Force to address organized crime across the border.

As for the tariffs’ use as a bargaining chip to address fentanyl traffic and other border issues, Brixie didn’t mince words.

“Come on, it’s bullshit. You think the prime minister of Canada is responsible somehow for fentanyl coming into the U.S.? That’s bullshit,” she said. “Drugs have been coming into our country from other countries since drugs and trade have been invented, and to think that somehow a global trade war is going to have some impact, (when) as far as I can tell, most countries try to stop the drug trade because it hurts everybody.”

For the second year in a row, Gov. Gretchen Whitmer has proposed an increase in the state’s tipping fee on solid waste.

Within the Department of Environment, Great Lakes and Energy budget recommendations, Whitmer outlined a plan to increase the solid waste surcharge from $0.36 per ton to $5 per ton, which would bring the state in line with the average Midwest tipping fee. The increased surcharge is designed to generate approximately $80 million in ongoing revenue, according to the governor’s budget proposal.

Whitmer proposed an increase to the tipping fee last year, but ultimately, it was removed by the Legislature as lawmakers didn’t pass the policy legislation necessary to implement the change(See Gongwer Michigan Report May 1, 2024).

Lawmakers were hesitant to immediately jump onboard with the tipping fees. The increase is unlikely to be supported by Republicans, who now control the House.

Senate Appropriations Committee Chair Sen. Sarah Anthony (D-Lansing) said proposals for raising revenue such as increasing the tipping fee or for e-cigarettes are items that would have to be carefully weighed.

“I think what we’re hearing loud and clear from taxpayers is that they’re hurting right now, that they need us to be very mindful of if and when we ask them to pay a little more to solve a problem, that it is a problem that we can’t do without tightening our own belts,” Anthony said.

Overall, Whitmer recommended a total budget of $1.19 billion for EGLE during the 2025-26 fiscal year ($296 million General Fund). Of the General Fund money, Whitmer designated $106 million as one-time appropriations for Fiscal Year 2025-26. This year’s budget recommendation represents a 13.7% increase from last year.

The executive recommendation continues funding for lead service line replacement and water infrastructure investment, designating $80 million in General Fund dollars for grants and low interest loans. Whitmer’s budget proposal also puts $80 million in state restricted funds toward community waste management and contaminated site clean-up.

The governor’s budget continues funding for increasing permitting efficiency, earmarking $39 million from the General Fund, and environmental protection, with $12.8 million in state restricted funds for regulating and permitting hazardous waste management, waterways, water use and discharge and natural gas storage.

The state would also continue to fund electric vehicle charging stations under the governor’s budget recommendation by offering $10 million in General Fund grants to install EV charging stations in local communities. Whitmer also designates from the General Fund $7 million for a septic system database, $6 million for water programs, and $370,000 for energy programs to enable EGLE to efficiently manage its energy efficiency programs and federal grants.

Gov. Gretchen Whitmer is expected to provide details on a long-term road funding plan sometime next week, but in the meantime, her budget for the Department of Transportation increases funding for Michigan’s roads and bridges by $211 million.

In total, Whitmer proposed $6.8 billion for the department. Of that, roughly $5 billion is earmarked for state and local roads.

She also earmarked $7.8 million in state restricted funds to explore road funding options. Of that, $7.7 million would be a one-time appropriation from the Michigan Transportation Fund, and $171,900 of ongoing support and one, full time employee, would be designated to conduct a study and pilot of potential road usage charge revenue options.

The governor’s proposal would provide $112.2 million in General Fund dollars to match federal money. This would ensure that Michigan fully matches all $1.8 billion that is expected to be available in federal highway aid, documents from the executive recommendation said.

The executive recommendation also provides $98.8 million in federal and state restricted funds to support revenue increases for state and local roads. That total reflects an additional $71.3 million in federal funding, with the remaining $27.5 million derived from net increases in baseline state restricted revenues.

The Department of Transportation budget would also include $767.1 million for transit and rail programs in state restricted, federal and local funds under the governor’s recommendation. That would reflect a $4.7 million increase in federal funds and include $2.9 million for anticipated federal transit capital grants.

Finally, the governor’s recommendation includes $5.3 million in state restricted funds for capital improvements at airports. The funding would be provided by a $5 million increase in the State Aeronautics Fund revenues, driven by a $2.5 million recommended increase to the state’s aircraft registration fee, which was last increase in 1988, according to budget documents.

The yet-to-be-created-in-statute Public Safety and Violence Prevention Fund is included in Gov. Gretchen Whitmer‘s budget recommendation as part of her Department of Treasury Revenue Sharing budget.

The fund was included in last year’s budget, as well, but the policy to officially create the program faltered at the finish line last year during lame duck when the Department of Treasury asked for substitutes on the bill passed out of the Senate, sending the legislation back to the House, which had already adjourned for the year.

The governor recommends $75 million in sales tax revenue for the Public Safety Violence Prevention Trust Fund. The money is to be distributed in proportion to violent crime data collected by the Department of State Police. Close to $6.5 million will also be used to augment existing community violence intervention grants and the crime victims’ rights fund within the Department of Health and Human Services.

House Speaker Matt Hall (R-Richland Township) has already expressed interest in reintroducing legislation to establish the fund.

In total, Whitmer’s budget recommendation includes $1.8 billion for revenue sharing. Of that, $1.1 billion is for constitutional revenue share and $345.5 million is for statutory revenue share to cities, villages, and townships. Counties would receive $301.6 million for statutory revenue sharing.

The constitutional revenue sharing represents a $25.7 million increase over last year’s budget and the statutory revenue sharing represents a 3.6% increase.

The governor also recommended an additional $2.5 million for the Financially Distressed Cities, Villages, or Townships grant program.