Final talks underway on setting Michigan's new minimum wage and tipped wage standards

Yahoo

12-02-2025

Michigan Capitol | Susan J. Demas
Sweeping changes to Michigan's standards on minimum wage and sick leave policies are set to take effect in nine days and it has business owners, service workers and lawmakers at odds with one another.
In 2018 lawmakers in the Republican-led legislature implemented changes to raise minimum wage to $15, phase out tipped wage credits and set mandatory sick leave policies that were being sought after by a ballot petition at the time. But after lawmakers adopted the changes, they amended them following the election, in a maneuver the Michigan Supreme Court in 2024 said was unconstitutional, ordering the changes in the petition to be put in effect on Feb. 21 this year.
Servers and restaurant-owners in Michigan have railed for and against the changes set to take effect in a few days and both the state Senate and House have introduced bills to amend the impending changes.
State Senators heard testimony in the Senate Regulatory Affairs Committee on Wednesday from service industry members on the Senate's version to change minimum wage and preserve tipped wages.
The then-Republican led legislature violated the people of Michigan's constitutional right to petition in 2018 to set rules on sick leave and minimum wage, Senate Regulatory Affairs Committee Chair Sen. Jeremy Moss (D-Southfield) said during a committee meeting Wednesday.
'…the impact of that controversial decision making has pitted employer against employee, worker against worker and Michigander against Michigander. Today, we have to rise above that,' Moss said. 'I will tell you that we will have people here today from the same industry, owners and servers alike, on opposite sides of this issue.'
Under the Supreme Court ruling, which lawmakers have the opportunity to preempt, minimum wage is set to rise from $10.56 to $15 in 2028 and tipped wages will increase annually to equalize Michigan's minimum wage by 2031.
Many restaurant owners and servers have told lawmakers that they like the current system that allows businesses to pay servers a tipped wage, currently 38% of minimum wage, saying that with tips, servers make much more than they would if they were minimum wage employees.
At the same time, some stakeholders say raising the minimum wage for all and eliminating tipped wages would work to lift up all workers.
The legislation for consideration by the committee, Senate Bill 8 would speed up the timeline to a $15 minimum wage by 2027 and not phase out tipped wages completely, raising tipped wage slowly to 60% of minimum wage over the next decade.
The restaurant industry is still licking its wounds from economic losses it suffered during the COVID-19 pandemic, President of the Michigan Restaurant & Lodging Association Justin Winslow said. Having to increase wages and then increase menu prices to compensate could be just the thing that causes small businesses to have to shutter their doors.
'You will see job loss. You will see some of the smaller, some of the more on the edge restaurants right now move towards closure,' Winslow said. '40% of the industry in Michigan right now is not making a profit. There's a staggering number. That means two out of five restaurants are on the edge of closure, and that's not sustainable. This is the kind of policy that would push them over the edge.'
Swaths of servers have come to the Michigan Capitol Building to plead with lawmakers, saying that if tipped wages go away, customers will stop tipping. Loss of tips is not a reality, people will still tip for great service, President of One Fair Wage Saru Jayaraman said.
'There is the fear mongering that the restaurant association engages in in every state… where workers try to get a raise, they say tips will go away. They say restaurants will shut down. They do it in every single state. They have captive audience meetings with their workers and tell them 'your tips are going to go',' Jayaraman said. 'We have good news for everybody in the room, for all of you, and for the state of Michigan, the seven states that have already done this and the many more that have followed in the last several years since the pandemic, are doing great.'
There are a lot of concerns on what iteration of a new policy is the right one and how each policy will be implemented, but it's important to note that there is opportunity for bipartisanship that both works for business owners and employees, Stacey LaRouche, press secretary for Governor Gretchen Whitmer said on behalf of the governor in a statement.
'Governor Whitmer has long opposed the unconstitutional tactic Republicans used to undercut working families and discourage companies from providing sick leave to employees,' LaRouche said. 'The administration has heard concerns about implementation of the new law, and the governor has made it clear that she is open to a bipartisan deal that protects servers and wait staff, while also providing certainty to small businesses and helping Michigan remain competitive.'
Furthermore, LaRouche said the governor called on leadership of the House and Senate to work towards a bipartisan deal and come to an agreement this week. If they can not come to an agreement, Whitmer is calling for the legislature to pass a short-term extension putting off the Supreme Court rules until July 1 to allow more time for negotiations.
Before lawmakers adjourned for the day Wednesday, the committee cleared the Senate's sick leave policy out of committee without the support of any of the four Republican members and with Sen. Sylvia Santana (D-Detroit) passing on the vote.
The Senate's plan, Senate Bill 15, would require businesses with more than 25 employees to offer employees 72 hours of paid sick time. And small businesses would have to permit employees to earn 40 hours of paid sick time, as well as 32 hours of unpaid leave.
The Regulatory Affairs Committee will reconvene Thursday afternoon to consider the future of the minimum and tipped wage standards under Senate Bill 8.
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