Employment 2024 Comparisons

At-Will Employment and Exceptions

The default service relationship in the USA is that of employer and employee. Most states, including Michigan, are “at will” employment jurisdictions, meaning either party (the employer or the employee) can terminate the relationship at any time and without having to provide a reason – provided, of course, that the termination decision is not otherwise prohibited by law (ie, due to discrimination or retaliation).

Although Michigan is an employment-at-will jurisdiction, an employer can forfeit its at-will right to terminate an employee by promising employment for a fixed period or stating (including verbally) that employment will only be terminated under certain circumstances, such as for “good cause or reason”. Thus, any employer not taking the time to confirm their at-will employment relationship – in writing – risks litigation over whether a higher standard might apply (eg, an agreement to terminate only for cause).

An additional exception to the prevailing at-will employment status is termination of employment for reasons against public policy; namely, for exercising a right conferred by well-established legislative enactment and for failing or refusing to violate the law. A carefully drafted disclaimer can help avoid these pitfalls.

Joint Employment

Joint employment is not the norm and applies only in limited circumstances – usually in a legal proceeding as a mechanism by which an employee attempts to recover damages against a third party. For a third party to be joint employer with another employer, the third party must have exerted significant control over the employee. Factors to consider in determining joint-employer status are:

• supervision of the employee’s day-to-day activities;
• authority to hire or fire the employee;
• promulgation of work rules and conditions of employment;
• issuance of work assignments; and
• issuance of operating instructions.

Independent Contractor Status

The importance of control in a relationship extends to the determination of whether a worker is an independent contractor versus an employee. Contracting is very popular in the USA; the number of contractors as a percentage of the workforce has doubled since the 1990s (see GAO-15-168R Contingent Workforce). As contracting has grown in popularity, it has attracted more scrutiny from the courts, law-makers and administrative agencies. Accordingly, simply describing a worker as an “independent contractor” is not sufficient. The law in this area is rapidly evolving and there are no rigid rules for determining whether a person is an independent contractor.

Most of the enforcement activity is at the federal level. The US government will seek unpaid income taxes, unemployment taxes, and overtime, as examples. Misclassified independent contractors can also seek benefits (health insurance and retirement) under the federal Employee Retirement Income Security Act (ERISA). The federal government generally applies a common-law control test, exemplified by the six factors used by the US Department of Labor (DOL):

• the degree of control that the putative employer has over the manner in which work is performed;
• the worker’s opportunities for profit or loss dependent on this managerial skill;
• the worker’s investment in equipment or material, or their employment of other workers;
• the degree of skill required for the work;
• the permanence of the working relationship; and
• the degree to which the services rendered are an integral part of the putative employer’s business.

At the state level, potential misclassification liabilities include income tax, unemployment benefits and workers’ compensation. In Michigan, an “economic reality test” has traditionally been applied to determine if an employer/employee or an independent contractor relationship exists. That test focuses primarily on whether the work performed is an integral part of the employer’s business and if the compensation from the employer is the primary income source. Recently, the Michigan unemployment agency adopted the US Internal Revenue Service 20-factor test.

Michigan legislators have proposed the adoption of the California “ABC” test for determining independent contractor status, which requires all three of the following conditions to be satisfied in order for the worker to have independent contractor status:

• the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
• the worker performs work that is outside the usual course of the hiring entity’s business; and
• the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

This test makes it more difficult for employers to prove that those doing work for them satisfy the independent contractor requirements. If adopted by the federal DOL, this test could soon be adopted by Michigan’s administrative agencies.

Businesses and workers are often complicit in the aim to characterise the worker as a non-employee independent contractor, as both parties save money. However, governments lose a lot of revenue and are therefore critically examining these relationships. Also, if the relationship sours or the worker is injured while working, the worker will often seek employment-related benefits (eg, workers’ compensation or unemployment benefits) and the business will have no insurance coverage in place to manage the risk for independent contractors. Best practice, at a minimum, is to be conservative in characterising workers as independent contractors and to make sure appropriate insurance coverage is in place for non-employee independent contractors.

Unpaid Internships

Unpaid internships have been the subject of considerable scrutiny in the past few years – notably, from the standpoint of whether private businesses can rely on unpaid interns. The DOL’s Wage and Hour Division has developed a test for evaluating whether an individual constitutes a “trainee” (intern) for the purposes of the Fair Labor Standards Act (FLSA) and does not require to be paid (see “Fact Sheet #71: Internship Programs Under The Fair Labor Standards Act”, which can be found on the DOL’s website). 

Exempt Versus Non-exempt Employees

For the purposes of Michigan’s wage and hour laws, which are analogous to the federal Fair Labor Standards Act (FLSA), employees are categorised as either exempt or non-exempt to the overtime requirements of the Improved Workforce Opportunity Wage Act (IWOWA) and the Fair Labor Standards Act (FLSA). Non-exempt employees are typically paid an hourly wage (but may be paid a salary at a rate no lower than the minimum wage) and must be compensated at a rate of one-and-a-half times their regular rate for any hours worked in excess of 40 in a given working week. Exempt employees, however, are not subject to IWOWA’s overtime requirement. To qualify as exempt, the employee must be compensated on a salary basis and at the same salary threshold as federal law and qualify – based on their job duties – under one of the statutory white-collar exemptions (ie, administrative, executive or professional).

The current salary thresholds are an area of flux under federal law. In April 2024, the DOL published its final rule regarding salary thresholds applicable to the most commonly used overtime exemptions. As a result, on 1 July 2024, the first of the mandatory threshold increases went into effect and raised the annual salary threshold for exempt employees to USD43,888 for employees subject to the executive, administrative and professional exemptions and to USD132,964 for those subject to the highly compensated employee exemption. On 1 January 2025, subsequent changes will further increase these thresholds to USD58,656 and USD151,164, respectively.

Since the rule’s publication, a number of legal challenges have been raised seeking to halt its enforcement. To date, none of these challenges has succeeded in staying enforcement of the rule or otherwise preventing it from going into effect and affecting employers nationwide.

Michigan does not have other enforcement guidance.

Generally, under Michigan law, a written contract of employment is not required and – unless a specific term is defined or a contract provides to the contrary – such employment is presumed to be for an indefinite term and an employer or employee can terminate the employment relationship for any reason that is not prohibited by law (McNeil v Charlevoix Cty, 772 NW2d 18, 24 (Mich 2009)).

Global employers entering the USA should be aware that – through their existing contracts, handbooks, policies and custom – they may undertake enforceable obligations not required by domestic law or fail to meet local requirements. Michigan has no presumption of “just cause” termination, nor does it require “notice pay” similar to other countries. Michigan has requirements for final payment of wages, including timing and payment of unused vacation or sick day benefits. Garden leave is not customary and may complicate an employee’s claim for unemployment benefits or exercise of Consolidated Omnibus Budget Reconciliation Act (COBRA) rights.

Michigan follows the FLSA, which regulates job classifications, eligibility and calculation of overtime, and minimum wages generally. Employers entering the US market should review positions and compensation for compliance with all domestic wage and hour laws to prevent disputes leading to litigation or government investigation.

In 2023, Michigan repealed its “freedom to work” law, which prevented employees from being required to join or support a labour union. With the strengthening of collective bargaining, employers entering Michigan should consider their obligations under the National Labor Relations Act (NLRA) and the ongoing enforcement priorities of the National Labor Relations Board (NLRB).

Employment Documents

Employees may also have contracts specifying the terms and conditions of their employment. Such contracts are not required in the USA, but may be warranted depending on the type of employee in question (eg, an executive). Barring a formal written contract, terms defining the relationship are typically relegated to documents such as offer letters, job descriptions, employment policies, or employment handbooks. In fact, these terms can even go so far as to reserve the sole authority to determine whether just cause for terminating employment exists. However, even if an employer defaults to the presumptive at-will employment status, individual employment agreements often address confidentiality and IP, plus non-compete and non-solicitation covenants that are enforceable if reasonable in scope and duration – see 2. Restrictive Covenants.

Michigan’s state wage and hour laws are substantially similar to their federal counterparts – specifically, the FLSA – with some minor variation. Typically, there are no limitations on the number of hours that may be worked within a day or week by an employee; however, to the extent the amount of work performed in any given week exceeds 40 hours, employers must pay their employees at a rate of one-and-a-half times their regular rate of pay (MCL 408.934a(1)). One exception to this general rule exists, requiring employers operating factories, workshops, and other places engaged in mechanical, manufacturing or other similar purposes to pay employees at a rate of one-and-half-times their regular rate for any hours worked in excess of ten hours in a day (MCL 408.401).

Given the desire of many employees to have flexible working arrangements that allow them to work alternative hours, remotely, or in in some sort of hybrid capacity, such arrangements remain popular across the country and in Michigan following the COVID-19 pandemic. Michigan law has not adopted any guidance specific to these types of arrangements, but employers that adopt such arrangements should continue to be mindful that many of the same legal obligations apply to their remote employees – for example:

• employees hurt on the job, even while not on the employer’s premises, may be entitled to workers’ compensation benefits; or
• an hourly, non-exempt employee who continues to do work remotely while “off the clock” may be entitled to compensation for all work done, even if not authorised to do so.

Likewise, Michigan law generally does not set any specific limits or requirements concerning part-time employees. No set hours threshold dictates which employees qualify as part-time employees under Michigan or federal law. However, to the extent an employee meets the minimum threshold (whether classified internally as part- or full-time), the employer may have an obligation to provide health insurance benefits to the employee under the Affordable Care Act. Likewise, under Michigan’s newly reinstated Earned Sick Time Act (ESTA) – effective as of 21 February 2025 – all employees (including part-time employees) will be entitled to take paid leave for their own illness or any other identified use under ESTA, such as:

• care for an ill family member;
• in relation to a crime or domestic violence; or
• in relation to the closure of their child’s school due to a public health emergency.

With few exceptions, the FLSA and the IWOWA govern wage and hour claims brought by employees in Michigan. The FLSA and the IWOWA require that all covered, non-exempt employees be paid at least minimum wage for every hour worked, and receive overtime pay at no less than one-and-a-half times the regular rate of pay for all hours worked in excess of 40 within a working week.

In the aftermath of COVID-19, employers operating in Michigan are seeing an increase in claims brought for unpaid remote work, travel or other off-the-clock work hours, unpaid meal periods and short breaks, and resulting unpaid overtime. Employers are also facing claims for miscalculation of overtime based on bonuses and incentives used to keep employees working. Frontline employers in healthcare and senior living sectors are experiencing an increase in collective action claims initiated by law firms outside of Michigan, as such firms utilise the internet to market for claimants.

Employers can reduce risk of these claims by implementing, communicating and enforcing strict time-keeping policies and practices so as to:

• prohibit unauthorised overtime;
• require employees to report all hours worked;
• review new bonuses and premium pay for inclusion in the regular rate;
• require supervisors to promptly audit time-keeping records; and
• pay for all hours worked, regardless of employee compliance.

As compared to its federal analog, Michigan’s minimum wage law is substantially higher than the rate dictated by the FLSA.

Effective as of 1 January 2024, the minimum wage in Michigan is USD10.33 per hour as set forth in the IWOWA (MCL 408.934). Under the IWOWA, a schedule of gradual wage increases was set to take place annually until 2031, culminating in a minimum wage rate of USD12.05 per hour. However, following the Michigan Supreme Court’s decision in Mothering Justice v Attorney General, a prior version of the IWOWA – which had been adopted by the legislature per Michigan’s ballot initiative procedures – was reinstated by the court, thereby dramatically raising the minimum wage increases (effective as of 21 February 2025).

The changes to Michigan’s minimum wage per the original ballot measure included setting the general minimum hourly wage to USD10 per hour, with a gradual increase over the next four years and a further adjustment after 2022 to account for inflation, as determined by the state treasurer. Additionally, the minimum wage rate for tipped employees was to be adjusted gradually to equal the general minimum wage.

The Supreme Court maintained this schedule of gradual increases but modified the deadlines to go into effect 205 days after the publication of its decision, setting forth a schedule for adjustment for 2025 through to 2028 and beginning general inflation adjustments in 2029. Notably, however, the Supreme Court’s remedy requires immediate adjustment to account for inflation since 2019 for all wage requirements – even those set to go into effect in 2025 – meaning wage rates will be significantly higher than the original USD10 per hour minimum and the current minimum of USD10.33 per hour. This is especially true for individuals working under Michigan’s special rules for tipped employees, whose wages will need to be increased to 48% of the new minimum wage by February 2025 and 100% of the minimum wage by February 2029.

Again, the final numbers for the minimum wage increases will depend on calculations by the state treasurer, which provided the following initial figures to the Michigan Supreme Court: USD12.48 per hour on 21 February 2025, USD13.29 per hour in 2026, USD14.16 per hour in 2027, and USD14.97 per hour in 2028. Additionally, the Michigan Department of Labor and Economic Opportunity and the state’s Treasury have sought further guidance from the Michigan Supreme Court in terms of enforcement and administration of the court’s order.

Michigan law does not otherwise dictate compensation requirements for employees within the state. For employees exempt from the overtime requirements of the IWOWA, the same tests are used as under the FLSA requiring employees to meet a specific duties test (ie, administrative, executive, professional) and be compensated at the same salary threshold as federal law.

Michigan law does not dictate any specific form of bonus compensation for workers.

Leave Requirements

Michigan law does not require employers to provide paid vacation leave or vacation pay. Beginning in February 2025, under Michigan law (ESTA), employers will be required to permit employees to use paid sick leave for the following reasons:

• the employee’s or the employee’s family member’s mental or physical illness, injury, or health condition, including:
1. medical diagnosis, care, or treatment of the employee’s mental or physical illness, injury, or health condition; or
2. preventative medical care for the employee;
• if the employee or the employee’s family member is a victim of domestic violence or sexual assault, then:
1. for medical care or psychological or other counselling for physical or psychological injury or disability;
2. to obtain services from a victim services organisation;
3. to relocate owing to domestic violence or sexual assault; to obtain legal services; or
4. to participate in any civil or criminal proceedings related to or resulting from the domestic violence or sexual assault;
• for meetings at a child’s school or place of care related to the child’s health or disability, or the effects of domestic violence or sexual assault on the child;
• for closure of the employee’s place of business by order of a public official due to a public health emergency;
• for an employee’s need to care for a child whose school or place of care has been closed by order of a public official due to a public health emergency; or
• when it has been determined by the health authorities having jurisdiction or by a healthcare provider that the employee’s or employee’s family member’s presence in the community would jeopardise the health of others because of the employee’s or family member’s exposure to a communicable disease.

For further details on earned sick time, please refer to the USA – Michigan Trends and Development chapter of this guide.

Leave (whether paid or unpaid) may qualify as a reasonable accommodation under the circumstances, in response to an employee’s request for a religious accommodation or an accommodation for disability or pregnancy, as required under applicable federal and Michigan law – for example, Title VII, the Americans with Disabilities Act (ADA), the Pregnant Workers Fairness Act (PWFA), the Elliot-Larsen Civil Rights Act (ELCRA), or the Persons with Disabilities Civil Rights Act (PWDCRA). Likewise, covered employers may be required to grant Family Medical Leave Act (FMLA) leave to qualifying employees as required by federal law.

Additionally, unpaid leave must be made available for qualifying employees for jury duty, military service and civil air patrol, as employees may be called for those services.

Confidentiality Requirements

Confidentiality agreements in Michigan need to be supported by legitimate business interests, such as the need to protect trade secrets, proprietary information or other confidential information. Moreover, any agreement not to disclose information cannot continue indefinitely. At a minimum, such agreements should confirm they only apply to the extent the information involved remains confidential and does not apply if that information becomes public.

Nevertheless, to the extent a confidentiality requirement is imposed on non-supervisory personnel, employers must be mindful not to draft the provisions so broadly that they might apply to conduct protected under the NLRA (eg, protected discussions related to wages, benefits, or other terms and conditions of employment). Doing so could be an unfair labour practice and invalidate the underlying agreement.

Non-disparagement Requirements

Michigan has no specific law addressing non-disparagement requirements. However, private sector employers must be mindful of NLRB precedent, which can make broadly worded non-disparagement requirements unlawful to the extent they might interfere with activity protected by the NLRA (eg, discussions related to the terms of their employment). As such, non-disparagement provisions should be generally limited to statements about the employer that are defamatory and maliciously untrue, such that they are made with knowledge of the falsity or with reckless disregard for the truth or falsity of the statement.

Promoting Competition in the US Economy

Employers’ use of restrictive covenants to limit their employees’ post-employment competitive activities remained a volatile issue throughout 2023. President Biden’s administration has been critical of employers’ use of non-compete agreements, as have state legislatures, including Michigan’s legislature. Although Michigan has not taken direct steps to curtail restrictive covenants yet, several federal government agencies have.

FTC’s Proposed Rule

On 5 January 2023, the Federal Trade Commission (FTC) proposed a new rule that would ban non-compete clauses. The proposed rule defines a non-compete clause as a “contractual term between an employer and a worker that prevents the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker’s employment with the employer”.

If adopted, the rule would apply to any contract which functions as a de facto non-compete – for example, a non-disclosure agreement, which effectively precludes a worker from accepting employment or operating a business after the conclusion of the worker’s employment with the employer. There is only one narrow exception in the rule, applying to non-compete clauses entered into by a person who is a substantial owner, member, or partner in the business entity at the time the person enters into the non-compete clause.

The proposed rule would prevent employers from entering into non-compete clauses with workers and would require employers to rescind existing non-compete clauses. If the rule is adopted, employers will have 180 days after the date of publication of the final rule to comply.

However, the rule (scheduled to go into effect on 4 September 2024) was ruled unenforceable on 20 August 2024 by the US District Court for the Northern District of Texas. The decision was extended nationwide and the non-compete ban is presently unenforceable across the country, but further litigation (including appeals) is expected on the rule, which may possibly see it restored and non-competes prohibited.

NLRB Adopts a Similar Position

On 30 May 2023, the NLRB’s general counsel Jennifer Abruzzo issued a memorandum setting forth her belief that non-compete provisions contained within employment contracts (including severance agreements) are generally unlawful under the NLRA. The memorandum requires that all cases involving non-compete provisions must be submitted to the Division of Advice, meaning the general counsel is seeking to identify proper cases in order to litigate the issue to create binding precedent.

According to Abruzzo’s memorandum, non-compete provisions are unlawful because they reasonably tend to “chill” employees in the exercise of Section VII rights to engage in concerted activity under the NLRA:

• by undermining their bargaining power during work stoppages;
• by undermining their ability to threaten resignation; and
• by undermining their ability to solicit former co-workers to join a competitor in efforts to organise or “salt” the workplace.

The memorandum does acknowledge narrow circumstances where non-competes are not prohibited, including:

• where the contract concerns an individual’s ownership interest in a competitor;
• true independent contractor relationships; or
• when “justified by special circumstances”.

These protections extend to all private-sector non-supervisory employees covered by the NLRA, regardless of whether the employer’s workforce is presently unionised.

Michigan’s 1985 Statute

Under current Michigan law, restrictive covenants remain generally enforceable. Prior to 1985, restrictive covenants were considered void and illegal as restraints of trade under Michigan statutory law. Some pending legislation seeks to curtail the use of restrictive covenants in Michigan, but none has been passed yet. Current MCLA Section 445.774(a), which is applicable to restrictive covenants and agreements, permits a restrictive covenant that “protects the employer’s reasonable competitive business interests” – provided the restrictive covenant is “reasonable as to its duration, geographical area, and the type of employment or line of business”.

A restrictive covenant must also be supported by “sufficient consideration”. Michigan courts continue to define and evaluate “sufficient consideration”, “reasonable duration”, and “geographical area”. A Michigan Court of Appeals decision found the “[m]ere continuation of employment is sufficient consideration to support a non-compete agreement in an at-will setting”. With regard to duration, the courts have generally found a period of six months to three years to be reasonable, with one- to two-year periods being the norm. The reasonableness of the geographical area will be determined by the scope of the business and the legitimate competitive business interests of the party seeking to enforce the restrictive covenant. Restrictive covenant provisions seeking to preclude an individual from working in any capacity in any location for a competitor have been found to be unreasonable.

If a Michigan court finds a restrictive covenant to be “unreasonable in any respect”, the Michigan statute permits a court to limit the agreement to render it reasonable in light of the circumstances in which it was made and specifically enforce the agreement as limited.

In recent legislative sessions in Michigan, bills have been introduced that would prohibit employers from entering into non-compete agreements with “low-wage employees”, which includes employees making less than USD15 per hour, 150% of the minimum hourly wage, or USD31,200 per year (whichever is more). Given recent trends and pending legislation, before enforcing restrictive covenants in Michigan, employers would be advised to check the current status of this matter.

Generally, non-solicitation provisions are enforceable under Michigan law to the extent they are compliant with Michigan’s general statutory requirements for restrictive covenants and are reasonably necessary to protect the employer’s reasonable competitive business interests. However, unlike covenants not to compete, non-solicitation agreements do not necessarily need to be limited in scope or geography – given that they do not serve as a significant restraint on an individual’s right to seek employment.

Non-solicitation agreements concerning customers, likewise, do not face the same type of intense scrutiny that such agreements face from the NLRB. The NLRB has recently taken the position that any restraints that interfere with or prohibit an employee’s ability to engage in rights protected under Section 7 of the NLRA are presumptively unlawful, in the absence of a compelling business interest. Agreements or policies that limit an employee’s ability to use information concerning fellow employees or to attempt to solicit them to leave their current employment have been routinely challenged by the NLRB as restraints that prevent employees from using what the NLRB has deemed their most important tool of leverage against their employer – their labour. Threats to quit, or actually leaving employment, and inducement by fellow employees to quit cannot be stifled by non-solicitation provisions. As such, employers in Michigan and across the country should be mindful of the NLRB’s position on such restraints, to the extent an employee is covered by the NLRA.

Unlike states such as Illinois, Michigan has yet to adopt any sort of comprehensive data privacy laws that protect an employee’s data, privacy, or other sensitive information. However, a variety of common-law and statutory protections have been adopted within the state that cover these subjects.

Privacy Protections

Privacy rights in Michigan are covered both by common-law and statutory protections.

Common-law protection

The Supreme Court of Michigan has recognised four common-law privacy claims:

• intrusion upon an individual’s seclusion, solitude or private affairs;
• public disclosure of embarrassing private facts;
• publicity that places an individual in a false light in public; and
• appropriation of an individual’s name or likeness for another’s advantage.

In some respects, these claims overlap – each turning on particular facts that generally involve information that is either “highly offensive”, “unreasonable” or “false”, and private information that has been disclosed publicly or to a large number of people.

Statutory protection

Michigan also provides statutory privacy protections for certain information.

Michigan has an eavesdropping statute prohibiting eavesdropping by third parties, including employers, on private conversations (MCLA 750.539a et seq). In such cases, all participants in the conversation must consent to recording the conversation. A participant may, however, record the conversation. Despite several challenges to the interpretation of this law, the Michigan Supreme Court has declined to change prior lower court precedent.

Michigan’s Polygraph Protection Act prohibits employers from requiring that applicants or employees take a polygraph (MCLA Section 37.201 et seq). Michigan’s Persons with Disabilities Civil Rights Act prevents employers from performing genetic testing or requesting genetic information (MCLA 37.1101 et seq).

Michigan’s Bullard-Plawecki Right to Know Act prohibits employers from gathering or maintaining records regarding “an employee’s associations, political activities, publications, or communications of non-employment activities”, without written authorisation (MCLA 423.508).

Michigan’s Social Security Number Privacy Act (MCLA 445.81 et seq) limits how an employer may use, display or transmit an employee’s social security number, and violations may result in civil and/or criminal penalties. Among other things, this statute requires encryption if four or more consecutive numbers of a person’s social security number will be used to gain access to the internet, websites, or computer systems or networks.

Michigan’s Internet Privacy Protection Act (MCLA 37.271 et seq) generally prohibits employers from accessing personal internet or social media accounts of employees and prohibits retaliation against a person who fails to disclose such information.

Under ELCRA, employers, employment agencies and labour organisations cannot request, make or maintain records regarding an applicant’s or employee’s misdemeanour arrest or detention that did not result in conviction (MCL 37.2205a(1)).

The Michigan PWDCRA prohibits discrimination against individuals with a disability or based on genetic information in employment (MCL 37.1202(1)). Under this law, employers cannot require as a condition of employment or promotion that individuals take a genetic test or provide genetic information (MCL 37.1202(1)(h)). Individuals may voluntarily provide and employers may use genetic information only if it relates to employee health and safety in the workplace (MCL 37.1202(2)).

Under the Workers’ Disability Compensation Act (WDCA), employers cannot disclose certain records concerning a worker’s job-related injury and workers’ compensation benefit amounts (MCL 418.230(1)(b), (c)).

An employer in Michigan can prescribe limits on an employee’s use of its data or equipment, but exceptions do apply.

The Michigan legislature has previously attempted to introduce legislation that, if adopted, would prohibit employers from making hiring decisions based on an applicant’s credit history. However, such attempts have not progressed and no law has been enacted.

Employers are continuing to encounter difficulties sponsoring foreign nationals for employment in the USA. Despite new and higher filing fees, US Citizenship and Immigration Services (USCIS) continues to experience lengthy delays in the adjudication process. Many local USCIS field offices have lengthy processing times due to staffing issues and a backlog. While the processing of immigration benefits by USCIS has improved in the past year, lengthy delays are still common. In addition, many US embassies and consulates continue to have significant backlogs for appointments to seek visas for entry into the USA.

Employers often consider the H-1B and L visas when sponsoring foreign nationals for employment in the USA. However, owing to increased scrutiny and changes in the immigration processes for the above-mentioned visa classifications, employers may also wish to consider the H-1B1, E, and TN visas in addition to the H-1B and L.

H-1B Visa

The H-1B visa is generally reserved for specialty occupations – positions requiring the theoretical and practical application of a body of highly specialised knowledge and which require the attainment of a bachelor’s degree or higher in a specific specialty or its equivalent, as a minimum for entry into the USA. New H-1B petitions are sometimes subject to an annual lottery due to high demand and USCIS has conducted a lottery in recent years. In 2020, the lottery underwent a significant processing change that resulted in the implementation of an additional fee for employers. This classification has experienced increased scrutiny in recent years, resulting in lengthy processing delays and increased rates of denial.

L Visa

The L visa is generally reserved for international companies seeking to transfer executives, managers or specialised workers to the USA. Like the H-1B visa, the L visa has experienced heightened scrutiny, resulting in lengthy processing delays and increased rates of denial. In addition, a change in the immigration process for renewals has added to the length of time required for a renewal and increased costs. Owing to the challenges of securing visa sponsorship for foreign national employees through H-1B or L visa classifications, employers are exploring alternatives to include the H-1B1, E and TN visa classifications.

H-1B1 Visa

The H-1B1 visa is reserved for citizens of Chile and Singapore. Like the H-1B visa, the H-1B1 is generally restricted to specialty occupations. Similar in many respects to the H-1B visa, the H-1B1 is attractive to many employers owing to the relative ease and reliability of the H-1B1 sponsorship process. This visa classification is generally a more reliable and faster option than the H-1B visa.

E Visa

Another option for sponsorship of foreign national employees is the E visa. The E visa category includes treaty traders (E-1), treaty investors (E-2) and Australian specialty occupation workers (E-3). To qualify as an employee of a treaty trader or treaty investor, the employee must share the same nationality as the employer, and the employee must be engaged in the duties of an executive, manager or specialised worker. The E-3 visa applies to Australian nationals performing services in a specialty occupation similar to the H-1B visa category but more easily attainable. As with the H-1B visa, employers have generally found the E visa to be reliable, fast and cost-effective – although there is concern about timing due to the lack of visa appointments at numerous US embassies and consulates.

TN Visa

The TN (NAFTA) visa allows employers to sponsor citizens of Canada and Mexico for employment in the USA in a professional capacity. While the North American Free Trade Agreement (NAFTA) has been replaced by the United States–Mexico–Canada Agreement (USMCA), the USMCA retains the TN visa classification. To be eligible for the TN classification, the profession must be noted on the treaty (list) and the foreign national employee must satisfy the qualifications for eligibility for employment in that profession. Employers have generally found this visa classification to be reliable, fast and cost-effective. Of note, an employer seeking to sponsor a Canadian citizen for employment under this visa classification may simply need to have the sponsored employee present an application package directly to a US Customs and Border Protection agent. Unfortunately, Mexican citizens requiring a visa are generally required to attend an appointment at a US embassy or consulate.

Generally, Michigan law does not dictate any specific requirements concerning mobile work. Employees that work in a remote setting, just like employees that work on-site or in other traditional means, are subject to the same protections under the law. As such, employers should be mindful that such employees – although not physically on-site – may assert similar claims for things such as:

• workers’ compensation;
• charges of discrimination; or
• even workplace safety complaints (even though not directly on the employer’s premises).

Employees may also be more likely to request mobile work as an accommodation under the PWFA and the ADA. Since the pandemic, many employers have created a remote work infrastructure that makes mobile work a reasonable accommodation that will not cause the employer undue hardship. In administering remote work policies, and when requesting an accommodation, employers should continue to be mindful of the potential for remote work as an accommodation, engage completely in the interactive process, and complete a thorough and comprehensive review as to whether remote work qualifies as a reasonable accommodation.

Sabbaticals are an example of a new manifestation in the field of “new work”, aimed at providing employees with flexibility in the workplace. Some employers provide sabbatical leave for specific purposes, such as continuing education, whereas others also allow it for personal/recreational purposes. Michigan law dictates that certain teachers and tenured university faculty members must be eligible for sabbatical leave; however, Michigan otherwise does not have specific requirements for other employers/positions.

When creating sabbatical leave programmes, employers should consider:

• whether the leave will be paid or unpaid;
• which benefits (such as paid time off) will continue to accrue or be available while the employee is on leave; and
• the interplay of such leave with applicable federal and state law.

Today there is an increasing focus on digitalisation and collaboration in the workplace. The movement has become known as “new work”. “New work” looks different for every employer and incorporates innovative concepts such as desk sharing, hybrid work, and the use of AI.

Employers who are embracing “new work” have prioritised workplace flexibility and automation. The infrastructures that have been put in place to promote workplace flexibility have resulted in many accommodation requests under the PWFA and the ADA being reasonable requests that do not cause the employer undue hardship.

AI has already begun to be utilised in the workplace and in the coming year(s) it will likely only become more prevalent. Although AI is sometimes viewed as a preferred vehicle for eliminating potential bias, such as during job interviews, the reality is that AI has its own set of potential legal pitfalls. Firstly, because AI is programmed by humans, the AI code developed may have the programmer’s bias (conscious or unconscious) built into it – given that the programmer determines what data or parameters will be used. Courts have allowed claims to proceed under federal employment laws based on unconscious bias if the bias can be proven to have resulted in intentional discrimination against a protected class. Similarly, Title VII of the Civil Rights Act of 1964 recognises a legal claim for disparate impact when a selection criterion adversely impacts a protected class.

Michigan does not currently regulate the use of AI in the workplace. However, the federal government has begun to create guidance for employers.

In 2023, President Biden’s Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence cautioned that the unbridled use of AI in employment may inadvertently lead to discrimination. A major concern discussed in the executive order and President Biden’s “Blueprint for an AI Bill of Rights” is how AI’s algorithm could lead to inadvertent discrimination, particularly when it comes to hiring practices.

In May 2024, the Department of Labor issued “Artificial Intelligence and Worker Well-Being: Principles for Developers and Employers”. This follows guidance from 2022 and 2023 from the Equal Employment Opportunity Commission (EEOC) on the use of AI in hiring. The EEOC’s guidance identified three primary ways that employers using AI may violate the ADA, as follows.

• The employer does not provide a “reasonable accommodation” that is necessary for a job applicant or employee to be rated fairly and accurately by the algorithm.
• The employer relies on an algorithmic decision-making tool that intentionally or unintentionally “screens out” an individual with a disability, even though that individual is able to do the job with a reasonable accommodation. “Screen out” occurs when a disability prevents a job applicant or employee from meeting – or lowers their performance on – a selection criterion, and the applicant or employee loses a job opportunity as a result. A disability could have this effect by, for example, reducing the accuracy of the assessment, creating special circumstances that have not been taken into account, or preventing the individual from participating in the assessment altogether.
• The employer adopts an algorithmic decision-making tool for use with its job applicants or employees that violates the ADA’s restrictions on disability-related enquiries and medical examinations.

The guidance also identified “promising practices” for employers to reduce the likelihood of disability bias when using AI tools.

Likewise, other states have passed or are considering legislation to protect candidates. Effective as of 1 January 2020, Illinois enacted the Artificial Intelligence Video Interview Act. The first-of-its-kind law imposes limitations on employers who use AI for candidate video interviews. Other states are considering legislation to limit the discriminatory use of AI or have created task forces to study the issue. This area of law is likely to continue to evolve, as more employers turn to AI in the hiring process. Owing to the newness of the technology that powers AI tools, the EEOC’s attempts to regulate it, and the lack of legal precedent to fall back on, employers should adopt and use AI tools with caution.

The NLRA protects the rights of employees to form, join and support a union or to refrain from doing so. Employees who want a union to be their collective bargaining representative can authorise the union to bargain with their employer over employee wages, hours and working conditions. At the end of 2023, union membership in Michigan amounted to 12.8% of all employees – a decrease from 14% in 2022.

The current level of union membership represents the lowest level of union membership in Michigan in 100 years. The United Auto Workers (UAW), which has historically been one of Michigan’s largest unions, lost approximately 6,500 Michigan members in the past year. However, the greatest loss of union membership in Michigan has been in the public sector arena. In fact, the Michigan Education Association – the union for public school teachers – has lost almost 30,000 union members in the past decade.

In order to boost union membership, in March 2023, Michigan governor Gretchen Whitmer signed into law a bill repealing the 2012 Right to Work law, which prohibited unions from requiring that private sector employees join the union and pay dues to it as a condition of employment. The new law went into effect in 2024 and is intended to boost union membership in private sector employers in Michigan.

Prior to 23 August 2023, unions were selected to be employees’ collective bargaining representative in one of the following three ways.

• First, if a union was able to establish that at least 30% of the employees in an appropriate proposed bargaining unit had signified either by signing union authorisation or petitions that they wanted the union to be their collective bargaining representative, the union could file a representation petition with the NLRB asking the agency to conduct a secret ballot election for employees to vote whether or not they wanted the union to be their collective bargaining representative. Once the union was able to make this initial showing of interest (ie, evidence of support of at least 30% of the employees in the proposed bargaining unit), the NLRB would process this petition and schedule the representation election. If the union received a majority of the votes in that election, the NLRB certified the union as the representative of those employees in the proposed bargaining unit.
• Second, if a union was able to obtain the support of a majority of employees in the proposed bargaining unit, the union could make a formal demand from recognition of the union by the employer. The employer, in return, had the right to voluntarily recognise the union as the employees’ collective bargaining representative or it could ignore that demand – instead forcing the union to file its petition for a representation election.
• Third, and in only the most extreme of cases, where an employer has committed hallmark violations of the NLRA in interfering with employees’ rights to a free or fair election, the union could use its demonstrated majority support to seek the imposition of a bargaining order to require the employer to recognise the union as the employees’ collective bargaining representative and bargain with the union despite the fact that the employer had received a favourable outcome in the representation election.

This process changed with the NLRB’s decision in Cemex Construction Materials Pacific, LLC issued on 23 August 2023. As a result of the Cemex decision, employers now act at their peril if they simply ignore the union’s demand for recognition. Rather, under the NLRB’s new framework established by this decision, if a union now makes a demand for recognition that is supported by a majority of employees in the proposed unit, an employer must either recognise and bargain with the union or promptly file its own petition for a representation election within 14 days of the demand for recognition. If the employer does nothing, it faces a bargaining order. Moreover, if an employer who seeks an election commits any unfair labour practice between the time of the demand for recognition and the election that would require setting aside the election, the petition will be dismissed and – rather than re-running the election – the NLRB will order the employer to recognise and bargain with the union, despite the employer’s favourable election result.

As a result of the Cemex case, and employers being forced to file petitions for representation elections when faced with union demands for recognition, the NLRB has seen a 3% rise in representation petitions being filed this year (a much smaller increase from the 53% increase in the number of filed petitions in 2023 but still an additional increase). Nationwide unions won more than 80% of these representation elections, while unions in Michigan won only 46% of the representative elections that have taken place this year.

Nationwide, unions won average first-year wage increases of 6.6% in collective bargaining agreements reached in 2023 – the highest wage increases employees have received since 1988. When one factors in signing bonuses and lump sum payments, the average increase was 7.3%, which is also a record high.

On the other hand, Michigan employees received average first year wage increases in collective bargaining agreements of approximately 6%. This includes the record-breaking gains of the UAW in its contracts with the Big Three automakers, which included 25% hourly wage increases over four years, including 11% increase in wages in the first year. These contracts represented the biggest jump in wage rates at the Big Three automakers since 2000. The wage gains followed the UAW’s engagement in a series of strikes across facilities in the Big Three auto companies called the Stand-Up Strike, which amounted to the longest national contract strike against the Big Three since 1973. The Stand-Up Strike involved the UAW striking one facility at a time, so as to allow the strikes to last longer without depleting the UAW’s strike fund. The strike began on 15 September 2023 and initially involved only three parts facilities – the Ford Motor plant in Wayne, Michigan, a Stellantis facility in Toledo, Ohio, and a General Motors facility in Wentzville, Missouri – before spreading to more than a dozen other Big Three parts facilities. After six weeks of striking, the UAW not only won large wage increases but also more generous 401k retirement benefits, cost of living increases and elimination of the lower-tiered wage rates for employees at the Big Three, including the more than 127,000 UAW-represented autoworkers in Michigan.

In light of this environment, Michigan employers who seek to remain union-free will need to ensure that that their annual wage increases and benefit offerings are competitive with what union-represented employers are winning through collective bargaining. At the same time, such employers will need to spend a substantial amount of time educating their employees about the collective bargaining process, as well as explaining the risks of collective bargaining and strikes, the time it takes to reach a contract, and the lack of a guarantee of success from the process.

Terminating an employee relationship is one of the most difficult decisions facing employers. As with all employment decisions, best practices dictate that there be clear and explanatory documentation of the termination decision, including the date termination was first considered, the reasons the decision was made, and when it was communicated to the employee.

At-Will Terminations

If the employment relationship is “at will”, it means that an employee has no contractual right to continued employment. That said, employers should always explain the basis for any employment termination. In the context of a lawsuit claiming that the termination decision was unlawfully discriminatory or retaliatory, many statutes permit an employer to avoid liability where they are able to articulate a legitimate, non-discriminatory (and/or non-retaliatory) basis for making their decision.

Termination of Employment by Operation of Contract

Where the employer and employee have entered into an employment agreement, that agreement will often address how and under what circumstances the employment relationship will terminate. Close attention should be paid to the language of the employment agreement, especially where there are defined terms addressing termination for “cause”, “change of control”, and other provisions. Employees are not entitled to severance pay as a result of termination unless the employer agrees to provide it according to the terms of an agreement or policy or makes a discretionary decision to offer it. Many employers offer severance pay upon termination. Best practices dictate that severance or separation agreements include a release and waiver of all claims against the employer (unless release and waiver is precluded by explicit operation of law).

Mass Lay-Offs

See 7.2 Notice Periods (WARN Act Obligations).

Generally, Michigan law does not dictate any specific requirements concerning the termination of the employment relationship unless an employment contract, collective bargaining agreement, or employer policy dictates to the contrary. By way of example, an employer may agree to require a period of notice pursuant to an employment contract or other conditions – or causes – before separating employment with an employee. Otherwise, an employee or employer may choose to terminate employment at any time.

Severance packages are often offered in exchange for:

• a release of claims;
• restrictive employment covenants, such as a non-compete or a requirement of confidentiality to protect confidential and trade secret information; or
• other offered consideration.

No specific requirements concerning the form of the agreement are required, but it should be prepared such that the employee can make a knowing and voluntary decision concerning the terms of the agreement. In certain situations, federal law requirements under the Older Workers Benefits Protection Act may warrant the inclusion of statutory review and revocation periods before the agreement may be executed and otherwise enforceable.

WARN Act Obligations

Certain mass lay-off events may trigger requisite notice to be given to employees that may be affected by the lay-off.

The Worker Adjustment Retraining and Notification Act of 1988 (the “WARN Act”) applies to any business that employs 100 or more employees (excluding part-time employees) and terminates employees under circumstances that qualify as a “plant closing” or “mass lay-off”. In those instances, the employer must provide affected employees and certain government officials at least 60 days’ advance notice of the job-loss event. Employers that fail to do so may be required to pay the affected employees back pay for each day of the violation, reimburse them for any loss of benefits and medical expenses incurred, and pay civil penalties

In addition to the federal WARN Act, Michigan has its own mini-Worker Adjustment and Retraining Notification (“mini-WARN”) law applicable only to employee-owned corporations. The Employee-Owned Corporation Act (MCL Sections 450.731–450.738) encourages – but does not require – an employer to notify the Michigan Department of Licensing and Regulatory Affairs (LARA), the affected employees and any employee organisation representing them, and the affected community as soon as possible after making a decision to close a facility at which at least 25 employees work.

No additional guidance exists under Michigan law concerning applicable notice periods regarding termination of employment.

Michigan law does not recognise dismissal for cause protections for employees as a matter of law. Again, the default service relationship in most US states (including Michigan) is an at-will employment relationship. An employer can forfeit its at-will right to terminate an employee by promising employment for a fixed period or stating (including verbally) that employment will only be terminated under certain circumstances, such as for “good cause or reason”.

Such “for cause” arrangements identify serious policy breaches, criminal charges, or other misconduct as grounds for termination of the employment or a requirement that the relationship may only be terminated following payment of liquidated or other commensurate damages under the terms of the contract. Failure to adhere to the terms of the contract may result in breach and potential claims for damages for non-compliance.

Michigan recognises separation agreements that confer severance benefits in exchange for a release of claims against the employer. Generally, no specific formalities must be recognised under Michigan law for the agreement to be enforceable; however, certain requirements under federal law must be followed to receive an effective and enforceable release of claims.

Waivers by employees age 40 or over are subject to special procedures to obtain a release of claims under the federal Age Discrimination in Employment Act (ADEA). In order for a waiver of claims to be valid under the ADEA, the release and waiver provisions must:

• be written in plain language understandable by the average individual eligible for the severance;
• specifically refer to ADEA claims and rights;
• not cover prospective or future rights or claims;
• be in exchange for valuable consideration in addition to any benefits or pay to which the employee was already entitled;
• advise the employee, in writing, to consult with an attorney before signing;
• provide the employee 21 days to consider the agreement; and
• permit the employee to revoke the agreement within seven days after it is executed by the employee.

In the case of a group termination – ie, involving termination of two or more employees from the same decision-making process – employees have 45 days (not 21 days) to consider the agreement (again, with a seven-day revocation provision). They also receive a disclosure identifying:

• the class of employees eligible to receive the severance package, their ages, and the ages of all employees within the same job classification, division or organisation who are not eligible or selected for participation in the termination programme; and
• the selection criteria.

Certain claims under Michigan law cannot be waived and include claims for unemployment benefits under the Michigan Employment Security Act and claims for workers’ compensation under the Michigan WDCA. And, although claims for discrimination may be released, the right for an employee to disclose the existence of any alleged acts of discrimination to a state or federal agency (eg, the EEOC) cannot be required to be waived.

Under Michigan law, it is illegal for employers to discriminate in the hiring process based on certain protected categories, as detailed here. Moreover, Michigan’s discrimination laws apply to small employees as well, including those with fewer than 15 employees who are not covered by federal discrimination laws. These protected categories of employees mirror or exceed what is covered by analogous federal laws such as Title VII of the 1964 Civil Rights Act and the ADA.

Michigan’s ELCRA (MCLS Section 37.2101 et seq) prohibits job application questions about the following protected characteristics of the applicant: race, colour, national origin, age, sex, height, weight, or marital status (MCLS Section 37.2206(2)). Following the 2020 landmark US Supreme Court decision in Bostock v Clayton Co, the Michigan Supreme Court’s 28 July 2022 opinion in Rouch World LLC v Department of Civil Rights ruled that the words “because of sex” in ELCRA protect discrimination based on sexual orientation (the decision did not address gender identity). MCLS Section 37.2202(1)(d) prohibits hiring discrimination due to a person’s pregnancy, childbirth or related medical condition. MCLS Section 37.2205(a) prohibits application questions regarding an applicant’s misdemeanour arrest, detention, or disposition that did not result in a conviction.

The Michigan PWDCRA (MCLS 37.1101 et seq) prohibits job application questions concerning the disability of a prospective employee that are unrelated to the duties of the particular job (MCLS Section 37.1206(2)(a)). The law also prohibits hiring discrimination on the basis of an applicant’s disability or genetic information unrelated to the duties of a particular job (MCLS Section 37.1202(1)(a)). Employers may not refuse to hire an individual when adaptive devices or aids would enable the individual to perform the job (MCLS Section 37.1202(1)(f)).

The Michigan Department of Civil Rights Pre-Employment Inquiry Guide provides practical guidance to employers regarding the legal limitations on job applications in Michigan.

Given the default “at will” nature of employment across Michigan and the USA, an employee’s ability to bring a claim of wrongful dismissal must be predicated on some violation of law (such as termination due to discrimination or retaliation for a protected activity, as further discussed in 8.2 Anti-discrimination and 8.3 Digitalisation) or a contractual right conferred upon the employee by agreement between the employer and employee (a contract for employment or a collective bargaining agreement).

Consequences for a wrongful dismissal are dependent on the remedy authorised by the particular statute or theory under which the aggrieved employee has raised the issue. By way of example, an employee claiming discrimination in violation of Title VII or ELCRA may be entitled to monetary damages for lost wages and benefits, back pay, front pay, reinstatement, injunctive relief, compensatory damages, attorney’s fees, and other costs associated with bringing the claim.

Where the wrongful dismissal claim stems from the breach of a contract, similar “make whole” remedies may be available if the dismissal was in retaliation for engaging in a right protected by law (eg, the NLRA) or resulted in a breach of collective bargaining agreement, whereby an arbitration award may follow to “make whole” the employee and award lost wages and potential reinstatement. Wrongful dismissal that results in a breach of an employment contract may result in contractual damages stemming from the terms of the agreement.

As outlined in 7.5 Protected Categories of Employee, an aggrieved employee may bring a claim for discrimination under either federal or state civil rights laws. A multi-element burden-shifting framework is employed in the analysis of these claims. In short, an employee must first establish a prima facie case of discrimination in that they were a member of a protected class, suffered an adverse employment action, and were treated differently to another employee who is outside their protected class. From there, an employer may challenge this showing by rebutting it with a legitimate, non-discriminatory reason for its action against the employee. Finally, the employee may then challenge this reason by establishing that any such reason was actually pretext and this reason was otherwise an attempt to cover up the employer’s true discriminatory motive.

Actual damages available vary by statute but, generally, an employee may seek monetary damages for lost wages and benefits, back pay, front pay, reinstatement, injunctive relief, compensatory damages, attorney’s fees, and other costs associated with bringing the claim.

The “Black Lives Matter” movement, “Me Too” movement and other socio-political movements continue to impact expansive EEOC priorities and employer policies and initiatives. The EEOC’s 2023 Strategic Plan prioritises prevention and remedy for systemic unlawful discrimination by employers. Recent case filings suggest that the EEOC will continue to focus on discrimination based on race or sex, and sexual harassment, while increasing its focus on expanding protections for the LGBTQIA+ and transgender communities.

Employers should be aware, however, of the rise in individual claims alleging reverse discrimination or preferential treatment based on an employer’s equality, diversity and inclusion (ED&I) programmes. Employers must be careful to ensure that their ED&I programmes do not suggest a preference or quota and that their practices do not, in fact, encourage such a preference or quota.

Broadened Training

Global and national employers are on trend to expand anti-discrimination and anti-bullying policies and training in order to prohibit harassment or offensive conduct on the basis of gender orientation, sexual preference and transgender status. Some employers are going a step further, prohibiting harassment or discrimination on any basis, including (but not limited to) protected characteristics identified in Title VII or Michigan’s ELCRA.

Post-pandemic HR Concerns

In the aftermath of COVID-19, returning employees have expressed heightened expectations for work–life balance, as well as increased sensitivity to anxiety. Employee ghosting (disappearance from the workplace) and gaslighting (manipulation of circumstances) are among post-pandemic HR trends. Employers continue to experiment with hybrid work. Employers are also broadening their behavioural policies to address micro-aggressions and micro-incivilities, which are subtle and sometimes unintended verbal expressions or behaviours that have the effect of diminishing or offending the hearer.

Public Policy and Religious Liberty

The debate between public policy and personal liberty is playing out in administrative charges and lawsuits for religious discrimination under Title VII and ELCRA. Employees required to submit to COVID-19 vaccination as a condition of new or continued employment continue to file class action lawsuits after being denied religious accommodation exempting them from employer-mandated vaccination.

The healthcare sector has been a proving ground for religious liberty class action claims, challenging employers to balance EEOC guidelines on religious exemption with compliance with the Centers for Medicare and Medicaid Services (CMS) and other emerging public health mandates. A 2023 proposed class action settlement in Albright et al v Ascension Michigan et al represents an early class action victory for hundreds of healthcare workers in recovering lost pay for suspension or dismissal after being denied religious accommodation from receiving COVID-19 vaccinations.

Litigants are citing the Religious Freedom Restoration Act of 1993 and recent US Supreme Court cases to insulate employers and employees alike from activities they establish are objectionable based on their sincerely held religious beliefs. In Groff v DeJoy, the Supreme Court reset the defence of “undue hardship” by requiring employers denying religious accommodation to show that granting the accommodation would result in substantial increased costs in relation to the conduct of its business. The Supreme Court ruled in 303 Creative LLC v Elenis that the First Amendment protects a Christian website designer’s right to decline service to gay couples.

Anti-retaliation and Whistle-Blower Protections

Nearly every federal and Michigan employment law protects employees who report perceived unlawful acts or participate in an investigation into the same. Even if it is ultimately determined that the employee’s perception is wrong, the employee will generally have “a right to complain” and will still be protected unless it is shown that the employee knew they were making a false report. Employees can seek similar remedies as outlined earlier for claims of retaliation as they would a claim for discrimination. Notably, however, claims for retaliation require a “but for” showing that the employee’s protected activity was the “but for” reason they suffered an adverse employment action (such as termination).

Employers can reduce the risk of these claims by implementing and following personnel management procedures that are communicated, taught in training, consistently applied, and well documented. Where an employee who expresses workplace concerns is the subject of personnel management, employers should strictly segregate addressing the employee’s workplace concerns and making employment decisions impacting that employee.

In response to the COVID-19 pandemic, remote and virtual proceedings became commonplace across the country. And in the time since, while their use has considerably diminished, such remote measures have remained popular and are still frequently used across all forums in which an employment dispute may be litigated. Prior to the pandemic, telephone conferencing was commonly used by the federal courts and has continued to be utilised for similar purposes. Such measures have likewise grown in popularity within Michigan state courts and in administrative proceedings.

No single rule has arisen across Michigan concerning the use of digital technologies in the adjudication of employments. A patchwork of requirements has developed dependent on the preferences of the forum in this regard.

Federal courts, Michigan state courts, and administrative agencies (eg, the EEOC, the NLRB, and the Michigan Workers’ Disability Compensation Agency) continue using remote methods such as telephone conferencing and video platforms such as Zoom to conduct fact-finding and routine aspects of case management and even to hold hearings on routine motions. For more substantive proceedings, such as hearings on dispositive motions and trials, courts and administrative agencies default to in-person proceedings. This is still, however, subject to the preference of the judge or officer conducting the proceeding.

Beyond the requirements of the forum, the use of such technologies has also become a tool of convenience among the parties to an employment dispute. Parties will often agree to the use of remote conferencing tools to engage in discovery – for example, through the taking of virtual depositions – and to facilitate alternative methods of dispute resolution, such as mediation.

The proper forum for an employment-related dispute varies on the nature of the claim an aggrieved employee may assert against their current of former employee.

Claims for discrimination arising under federal law (eg, Title VII, the ADA) must first be administratively exhausted with an administrative agency before such claims may be brought as part of a lawsuit in court. However, similar claims arising under Michigan’s state law analogues do not require an employee to first exhaust their administrative remedies (ie, filing a charge with the Michigan Department of Civil Rights before proceeding to file a lawsuit concerning such claims in either state or federal courts).

Unlike discrimination claims, wage and hour claims arising under Michigan and federal law may either be litigated in the state or federal courts depending on the facts of the specific case and as determined by whether the courts may exercise jurisdiction over the parties and the claims.

Claims regarding workers’ compensation and unemployment insurance benefits are appealed respectively through the administrative processes of the Michigan Workers’ Disability Compensation Appeals Commission and the Unemployment Appeals Commission. These processes typically involve an initial benefits re-determination, an appeal and a hearing of the re-determination, and a final internal appeal mechanism before each commission’s internal review commission. Decisions of the review commission may then be appealed to the state’s circuit courts and seek ultimate review from the Michigan Supreme Court. A notable exception to this rule, however, is that an employee who claims to have been retaliated against for pursuing workers’ compensation benefits may bring such a claim in court.

Claims regarding workplace safety follow similar administrative procedures. Generally, such claims flow from complaints or violations identified by the Occupational Safety and Health Administration (OSHA) that result in the issuance of a citation by OSHA or, in the case of Michigan – given that it is a “state plan” state (ie, one that has adopted its own state-level enforcement agency of occupational safety and health laws) – before the Michigan Occupational Safety and Health Administration. Likewise, employees who claim to have been terminated in retaliation for complaining about an issue related to workplace safety may choose to bring a common-law claim for termination in violation of public policy in court following the Michigan Supreme Court’s recent decision in Stegall v Resource Technology Corp.

Finally, claims related to activity protected by the NLRA or for conduct otherwise covered by a collective bargaining agreement are subject to the requirements of the NLRA. An employee claiming to have been subject to an unfair labour practice must file a charge with the NLRB, which will be adjudicated under the NLRB’s administrative processes. Employees covered by a collective bargaining agreement who raise claims related to their employment must, however, grieve such claims with their union. Such claims will be resolved pursuant to the terms of the collective bargaining agreement, which may result in binding arbitration of the dispute. The NLRA only applies to non-managerial employees of private employers engaged in substantial interstate commerce. Public employees may be covered by the Michigan Public Employment Relations Act and similar disputes are subject to review and enforcement by the Michigan Employment Relations Commission.

The law in the USA and Michigan generally favours the private adjudication of disputes. If the employer and employee have entered into an enforceable agreement to arbitrate a dispute, and the disputed matter is the type of claim that the parties agreed to arbitrate, the courts will typically order the parties to proceed to arbitration.

Arbitration can cover the full range of employment-related disputes. However, employers should be aware that the NLRB has recently begun to intensely scrutinise over-broad arbitration agreements that effectively cover disputes arising under the NLRA. As a matter of policy, the NLRB has stated that such over-broad agreements deny employees the right to exercise rights afforded to them by the NLRA. In adopting arbitration policies, employers should be mindful and use care in working such agreements to avoid the potential for an unfair labour practice charge in this regard.

Generally, in civil litigation the “American Rule” is followed, whereby each party bears its own costs in litigation (including attorney’s fees). However, in the employment context, many statutes contain fee-shifting provisions enabling the prevailing party to recover attorney’s fees and costs. First, certain reasonable costs other than attorney’s fees are available to a prevailing party (whether plaintiff or defendant) under Rule 54 of the Federal Rules of Civil Procedure and the analogous Michigan Court Rule 2.625.

Additionally, many federal statutes that authorise an employee to bring a claim against their employer (including claims arising under Title VII of the Civil Rights Act, the ADA, the ADEA, the Equal Pay Act, Sections 1981 and 1983 of the Civil Rights Acts, the FMLA, the Genetic Information Nondiscrimination Act (GINA), the FLSA and the ERISA) authorise the recovery of reasonable attorney’s fees and costs by the prevailing party (plaintiff) – ie, “if they succeed on any significant issue in litigation [that] achieves some of the benefit the parties sought in bringing the suit” (Tex State Teachers Ass’n v Garland Indep Sch Dist, 489 US 782, 789 (1989)). Private settlement does not trigger this right but instead there must be some alteration of the legal relationship between the parties resulting from some judicial action, including judgment on the merits or a settlement decree resulting in an injunction or a declaratory judgment of damages award.

Michigan similarly authorises the recovery of reasonable attorney’s fees to a prevailing plaintiff under its laws, including ELCRA, the PWDCRA, the IWOWA, the Payment of Wages and Fringe Benefits Act, ESTA, the Military Establishment Act, the Whistleblower Protection Act, the Bullard-Plawecki Employee Right to Know Act, and the Michigan Uniform Trade Secrets Act. 

Under Title VII, the ADA, GINA, Sections 1981 and 1983, the ADEA, and Equal Pay Act, if an employer is successful in the defence of claims brought against it, in limited circumstances it may seek recovery of reasonable attorney’s fees at the court’s discretion. These fees are only available when the court has first determined that the plaintiff brought or litigated such claims in bad faith or such claims were frivolous, unreasonable, or without foundation. Fees are not recoverable under the Uniformed Services Employment and Re-employment Rights Act nor the FMLA in this instance. Michigan law similarly allows for the recovery of attorney’s fees by defendants in the event the claims brought against it were determined to be frivolous (MCLS § 600.2591).

Finally, attorney’s fees may be awarded as sanctions under Rule 11 or 28 USC Section 1927, if the applicable standards are met warranting their award to discourage and remedy frivolous litigation.

In determining the amount of fees to be awarded, courts generally use the “lodestar” method, whereby the amount is calculated by multiplying the attorney’s reasonable hourly rate by the time spent on the case. Upon entry of judgment by the court, the prevailing party must file a motion for fees in accordance with the requirements of the Federal Rules of Civil Procedure or any applicable local rule or decision. Motions for fees must be supported with evidence of their hourly rate, time spent on the matter, and evidence to support the attorney’s hourly rate and billing practices within the relevant community. In class action lawsuits, attorney’s fees are similarly available to counsel for the prevailing party, but are subject to additional requirements and more strictly scrutinised to ensure fairness with regard to the class as a whole and any absent members.

Finally, as a matter of practice, while attorney’s fees are typically not available in matters proceeding before an administrative agency, the NLRB has recently held that attorney’s fees for an aggrieved employee or union may be recoverable as a form of compensatory damages. The NLRB views these costs as damages to be sought in order to make the aggrieved party whole and has routinely sought these costs in a string of decisions following its December 2022 decision in Thryv, Inc. Whether the NLRB has the authority to seek these types of damages under its authority from the NLRA is presently on appeal in multiple matters in the federal circuit courts.