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Navigating Employment Law for Small Businesses in Michigan

As a small business owner in Northern Michigan, you're likely focused on growing your company, serving your customers, and making a positive impact in your community. However, one crucial aspect of running a successful business that often gets overlooked is understanding and complying with employment laws. At True North Legal Group, we recognize the challenges faced by entrepreneurs and small business owners when it comes to navigating the complex landscape of employment regulations. That's why we've put together this comprehensive guide to help you understand the key aspects of Michigan employment law and best practices for managing your workforce.

Understanding Michigan Employment Laws

Wage and Hour Laws

Michigan's wage and hour laws are designed to ensure fair compensation for employees. Let's delve deeper into the key aspects:

Minimum Wage: 

As of January 1, 2024, the minimum wage in Michigan is $10.33 per hour for non-tipped employees. This rate applies to employers with two or more employees. For tipped employees, the minimum wage is $3.93 per hour. It's important to note that these rates may change annually based on inflation and other economic factors.

Overtime: 

Michigan follows federal overtime regulations. Non-exempt employees must be paid 1.5 times their regular rate of pay for hours worked beyond 40 in a workweek. This applies to most hourly workers and some salaried employees who don't meet specific exemption criteria.

Recordkeeping: 

Employers must maintain accurate records of employee hours worked, wages paid, and other employment-related information. This includes details such as the employee's name, address, occupation, rate of pay, and total wages earned. These records should be kept for at least three years and be readily available for inspection by state authorities if requested.

Pay Frequency and Statements: 

Michigan law allows for weekly, biweekly, semimonthly, or monthly pay periods. Employers must provide detailed pay statements each time wages are paid, including hours worked, gross wages, the pay period, and itemized deductions.

Employee Rights and Protections

Michigan offers robust protections for employees, ensuring a fair and safe work environment:

Anti-Discrimination Laws: 

The Elliott-Larsen Civil Rights Act (ELCRA) in Michigan prohibits discrimination based on race, color, national origin, age, sex, height, weight, familial status, and marital status. Recent amendments have expanded these protections to include sexual orientation and gender identity. This law applies to all employers in Michigan, regardless of size, providing broader coverage than some federal anti-discrimination laws.

Paid Medical Leave: 

The Michigan Earned Sick Time Act requires employers with 10 or more employees to provide up to 72 hours of paid earned sick time per year. Smaller employers must provide up to 40 hours of paid earned sick time and an additional 32 hours of unpaid earned sick time. This law ensures that employees can take time off for personal or family health issues without fear of losing their job or income.

Family and Medical Leave: 

While Michigan doesn't have its own family and medical leave law, employers with 50 or more employees must comply with the federal Family and Medical Leave Act (FMLA). This law provides eligible employees with up to 12 weeks of unpaid, job-protected leave per year for specific family and medical reasons.

Workplace Safety: 

Employers must provide a safe work environment and comply with Michigan Occupational Safety and Health Administration (MIOSHA) regulations. This includes providing necessary safety equipment, training employees on safety procedures, and maintaining a workplace free from recognized hazards.

Evolving Areas of Michigan Employment Law

The landscape of employment law in Michigan is continually evolving. Here are some areas that are currently undergoing changes or receiving increased attention:

 

Fair Scheduling Practices

The proposed "Employee Fair Scheduling Act" is currently under review by the Michigan Legislature. If passed, this law would significantly impact how employers manage work schedules: 

  • Employers would be required to provide written work schedules to employees at least 14 calendar days before the start of the workweek.
  • Any changes to the schedule would require at least 96 hours' notice.
  • The law aims to provide more stability and predictability for employees, particularly in industries with variable schedules.

This potential legislation reflects a growing national trend towards fair scheduling practices, recognizing the impact that unpredictable schedules can have on employees' work-life balance and financial stability.

Expanded Protections Against Discrimination

Recent amendments to the Elliott-Larsen Civil Rights Act have broadened protections to include sexual orientation and gender identity. This change affects businesses of all sizes, even those with just one employee. The expansion of these protections means that employers cannot discriminate against employees or job applicants based on their sexual orientation or gender identity in any aspect of employment, including hiring, firing, promotions, and workplace conditions. Furthermore, companies need to update their anti-discrimination policies and training programs to reflect these new protections. Employers should be prepared to handle accommodation requests related to gender identity, such as use of preferred pronouns or access to gender-specific facilities.

Privacy in the Digital Age

As technology continues to play a larger role in the workplace, privacy concerns have come to the forefront. Michigan law prohibits employers from requesting access to an employee's or applicant's personal internet accounts. This includes:
Social media profiles
Personal email accounts
Private online photo storage

Employers need to be cautious about how they gather information about employees or applicants online. While publicly available information may be fair game, attempting to access private accounts or pressuring employees to provide access is illegal.

Federal Employment Laws Applicable to All Businesses

In addition to Michigan-specific laws, several federal laws apply to businesses across the United States, including those in Michigan. Understanding these laws is crucial for ensuring compliance and protecting both employer and employee rights.

Title VII of the Civil Rights Act of 1964

Title VII is a cornerstone of federal anti-discrimination law. It applies to employers with 15 or more employees and prohibits discrimination based on race, color, religion, national origin, and sex (including pregnancy, sexual orientation, and gender identity). Employers must ensure that their hiring practices, workplace policies, and day-to-day operations do not discriminate against employees or applicants based on these protected characteristics. This includes avoiding both intentional discrimination and practices that have a disparate impact on protected groups.

Americans with Disabilities Act (ADA)

The ADA prohibits discrimination against qualified individuals with disabilities in all aspects of employment. Key provisions include:

  • Employers must provide reasonable accommodations to qualified employees or applicants with disabilities, unless doing so would cause undue hardship.
  • The law covers physical and mental impairments that substantially limit one or more major life activities.
  • Employers are prohibited from asking about disabilities before making a job offer, but may ask about an applicant's ability to perform specific job functions.
Age Discrimination in Employment Act (ADEA)

The ADEA protects workers aged 40 and older from age-based discrimination. It applies to employers with 20 or more employees and covers hiring and firing, promotion, wages, benefits, job assignments, and training. Employers should be careful to avoid age-based stereotypes and ensure that employment decisions are based on factors other than age.

Fair Labor Standards Act (FLSA)

The FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards. Key provisions include:

  • A federal minimum wage of $7.25 per hour (note that Michigan's minimum wage is higher and takes precedence)
  • Overtime pay at a rate of not less than 1.5 times the regular rate of pay for hours worked over 40 in a workweek for non-exempt employees
  • Restrictions on the employment of minors

Employers must carefully classify employees as exempt or non-exempt and maintain accurate records of hours worked and wages paid.

Family and Medical Leave Act (FMLA)
The FMLA provides eligible employees of covered employers with up to 12 weeks of unpaid, job-protected leave per year for specified family and medical reasons. It applies to employers with 50 or more employees and covers:

  • Birth and care of a newborn child
  • Adoption or foster care placement
  • Care for an immediate family member with a serious health condition
  • The employee's own serious health condition

Employers must maintain employees' health benefits during leave and restore them to their same or an equivalent position upon return.

Best Employment Law Practices for Small Business Owners

Implementing best practices can help small business owners navigate the complex landscape of employment law. Here are some expanded strategies to consider:

Develop Comprehensive Policies and Procedures

Create a detailed employee handbook that outlines your company's policies, including anti-discrimination and harassment policies, wage and hour policies, leave and time-off policies, performance expectations and disciplinary procedures, social media and technology use guidelines, and complaint procedures for reporting violations. Regularly review and update these policies to ensure they comply with current laws and reflect your company's values. Consider having an employment law attorney review your handbook periodically.

Implement Robust Recordkeeping Systems

Maintain accurate and detailed records of employee information, hours worked, wages paid, and any employment-related decisions. This includes:

  • Time and attendance records
  • Payroll records
  • Performance evaluations
  • Disciplinary actions
  • Accommodation requests and responses
  • Training completion records

Consider using HR software or working with a payroll service to ensure compliance with recordkeeping requirements. These systems can often generate reports that help you identify potential compliance issues before they become problems.

Provide Regular and Comprehensive Training

Conduct regular training sessions for managers and employees on topics such as anti-discrimination and harassment prevention, workplace safety and emergency procedures, company policies and procedures, customer service and professional conduct, and industry-specific compliance requirements. Consider offering both in-person and online training options to accommodate different learning styles and schedules. Document all training sessions, including attendance and content covered.

Stay Informed About Legal Changes

Keep yourself updated on changes in employment law. At True North Legal Group, our subscribing members are made aware of changes in employment law through our legal newsletter, our informative blog, and the seminars that our team attends. Companies can also join local business associations and participating in their educational events. A best practice could be to designate a team member to be responsible for tracking legal changes and updating company policies accordingly.

Establish Fair and Consistent Hiring Practices

Develop a structured hiring process that includes:

  • Clear, up-to-date job descriptions that focus on essential functions
  • Consistent interview questions that are job-related and avoid potentially discriminatory topics
  • Objective evaluation criteria based on job requirements
  • Standardized background check and reference check procedures
  • A diverse hiring panel to minimize potential bias

Document each step of the hiring process and retain records of all applicants, even those not selected, for at least one year.

Foster Open Communication with Employees

Create an environment where employees feel comfortable raising concerns by implementing an open-door policy, conducting regular employee surveys or feedback sessions, establishing a confidential reporting system for sensitive issues and providing multiple channels for employees to voice concerns (e.g., direct supervisor, HR, anonymous hotline). Address issues promptly and fairly to prevent small problems from escalating into legal disputes. Document all employee complaints and the steps taken to address them.

Conduct Regular Policy and Practice Audits

Schedule regular reviews of your employment policies and practices to ensure they remain compliant with current laws and align with your business needs. This should include annual review of the employee handbook, periodic wage and hour audits to ensure proper classification and payment, review of job descriptions and actual job duties to ensure accuracy, and assessment of physical workplace for safety and accessibility. Consider engaging an external consultant or attorney, like the team at True North Legal Group, to conduct these audits to get an objective perspective.

Properly Classify Workers

Ensure that you correctly classify workers as employees or independent contractors. Misclassification can lead to significant legal and financial consequences. Factors to consider include:

  • Degree of control over the worker's schedule and methods
  • Financial aspects of the relationship (e.g., who provides tools and equipment)
  • Nature of the work relationship (temporary vs. permanent, integral to the business vs. supplemental)

When in doubt, consult with an employment law attorney or the Department of Labor for guidance.

Handle Terminations with Care

When terminating an employee, document the reasons thoroughly and ensure the decision is based on legitimate, non-discriminatory factors. Consider conducting a final review of the employee's performance history and any disciplinary actions. You should also prepare a termination checklist to ensure all necessary steps are taken (e.g., final paycheck, benefits information, return of company property). Having a witness present during the termination meeting can also help eliminate conflict and confusion. Finally, by offering severance agreements, especially for higher-risk terminations, you can protect against future disputes. Be consistent in your termination practices across all employees to avoid claims of discrimination.

Seek Legal Counsel

Don't hesitate to consult with an employment law attorney when faced with complex situations or potential legal issues. This can include:

  • Responding to discrimination or harassment complaints
  • Handling requests for accommodations under the ADA
  • Navigating complex leave situations involving multiple laws (e.g., FMLA, ADA, workers' compensation)
  • Drafting or reviewing employment contracts or severance agreements
  • Responding to government audits or investigations

Proactive legal advice can often prevent costly disputes down the line and help you make informed decisions that protect your business. By implementing these expanded best practices, small business owners in Michigan can create a fair, compliant, and productive work environment while minimizing legal risks. Remember that employment law is complex and ever-changing, so staying informed and seeking professional guidance when needed is crucial to your business's success.

The Value of TNLG’s Legal Membership

As your business grows, navigating the complexities of employment law can become increasingly challenging. This is where True North Legal Group's legal membership program can provide immense value. Our fractional general counsel services offer small business owners in Northern Michigan access to experienced legal professionals who can provide ongoing guidance on employment law matters.
With our legal membership program, you can:

  • Receive regular updates on changes in employment law
  • Get assistance in developing and reviewing employment policies
  • Obtain guidance on handling complex employee situations
  • Access unlimited legal advice when making important employment decisions

By partnering with True North Legal Group, you can focus on growing your business while having peace of mind that your employment practices are legally sound and up-to-date.

Navigating employment law as a small business owner in Michigan doesn't have to be overwhelming. By staying informed about current laws, implementing best practices, and seeking professional guidance when needed, you can create a fair and compliant work environment that supports your business growth.

Remember, compliance with employment laws is not just about avoiding legal issues – it’s about creating a positive workplace culture that attracts and retains top talent. By prioritizing employee rights and fair treatment, you’re investing in the long-term success of your business.

If you're looking for ongoing support in managing employment law compliance for your Northern Michigan small business, consider joining True North Legal Group's legal membership program. Our experienced team is here to help you navigate the complexities of employment law and support your business growth. Contact us today to learn more about how we can assist you in creating a legally sound and thriving workplace.