Lawmakers finalize bipartisan deal on tipped wage and sick time hours ahead of deadline

Yahoo

21-02-2025

Senate Majority Leader Winnie Brinks (D-Grand Rapids) and Senate Majority Floor Leader Sam Singh (D-East Lansing) discuss their efforts on a bipartisan deal to curb incoming minimum wage and paid sick leave changes on Feb. 20, 2025. | Kyle Davidson
Facing a tight midnight deadline, the Michigan Legislature negotiated late into the night on Thursday, as members sought to finalize a deal on a pair of policies trimming back changes to the state's minimum wage and paid sick time policies set to take effect the following day.
At the beginning of the year, the Republican-led House and Democratic-led Senate each offered their own proposals for retaining the state's tipped wage and modifying new sick time requirements; they ultimately reached a deal with Senate Bill 8 and House Bill 4002, clearing several hurdles which could have prevented either policy from becoming law.
Although both bills were presented to Democratic Gov. Gretchen Whitmer with the expectation of a signature, House Bill 4002, which dealt with earned sick time, was not presented to the governor until 1:30 a.m. Friday, after the midnight deadline. How that will impact the legislation is unclear.
Without action from the Legislature, the minimum wage would increase to $12.48 on Friday, gradually rising to $14.97 by 2028 and phasing out the tipped wage by 2030. Employers with fewer than 10 employees would be required to offer up to 40 hours of paid sick leave and 32 hours of unpaid leave accrued over the year, while businesses with 10 or more employees must offer 72 hours of paid sick leave a year.
The new rules came down through a mandate from the Michigan Supreme Court in July 2024. In its ruling, the Court determined that members of the Republican-led Legislature in 2018 acted unconstitutionally by taking up two ballot proposals — one to raise the minimum wage and eliminate the lower-than-minimum tipped wage rate and another setting new paid sick leave requirements for employers — and stripping out key components from each initiative through amendments.
Servers and business owners have railed against the court-ordered changes, with representatives of the restaurant and hospitality industry warning the new policies would shutter one in five restaurants and prompt layoffs for 40,000-60,000 restaurant jobs.
However, Democrats and Republicans were able to meet in the middle on Senate Bill 8, as members of the House voted to send the bill back to the Senate on Wednesday.
The proposal, put forth by State Sen. Kevin Hertel (D-St. Clair Shores), would raise the state minimum wage to $15 by 2027 and increase the tipped minimum wage from 38% to 50% by 2031 rather than phasing it out.
However the policy had to survive a nail-biter of a vote in order to take immediate effect.
Of the 37 members in the chamber, 25 votes were needed in order to grant the bill immediate effect. With only 20 Senators voting in favor of the bill when it moved out of the Senate last Thursday, its fate seemed uncertain, though 26 Senators ultimately voted in favor of granting the bill immediate effect.
Among those supporting immediate effect were Sens. Sarah Anthony (D-Lansing), Jon Bumstead (R-North Muskegon), John Cherry (D-Flint) and Mallory McMorrow (D-Royal Oak) who previously voted against the effort, and Sens. Kevin Daley (R-Lum), Ed McBroom (R-Vulcan) and Rick Outman (R-Six Lakes) who were excused during last week's vote.
After granting Senate Bill 8 immediate effect, members of the Senate also needed to reach a deal on the House's proposed changes to the Earned Sick Time Act, House Bill 4002. The bills are tie-barred together meaning both policies must pass for either to take effect.
While the initial version of House Bill 4002 would have excluded businesses with fewer than 50 employees from the new sick leave requirements, the Senate's own sick leave proposal — Senate Bill 15 — would have allowed businesses with fewer than 25 employees to offer 40 hours of sick leave and 32 hours of unpaid leave, rather than 72 hours of paid sick leave.
The final version of House Bill 4002 — sponsored by Rep. Jay DeBoyer (R-Clay Twp.) — requires businesses to provide employees with 1 hour of paid earned sick time for every 30 hours worked. However, small businesses — defined as employers with 10 or fewer employees — would have the option to provide their employees with 40 hours of paid sick time at the beginning of the year instead, and would not be subject to the law until Oct. 1.
New businesses who have yet to hire an employee before House Bill 4002 takes effect would also be exempt from the new law for three years after hiring their first employee.
Employers with more than 10 employees are also allowed to provide their employees with 72 hours of paid earned sick time at the beginning of the year for immediate use.
Employers with part time employees can also provide those employees with their time off at the beginning of the year, provided they notify those employees how many hours they are expected to work in a year and offer time off equal to what they would accrue if they worked all of the hours expected of them. If they go over that requirement, they will accrue additional sick time.
Small businesses must allow their employees to carry over at least 40 hours of sick time from one year to the next, while businesses with more than 10 employees must allow them to carry over 72 hours.
While businesses can also allow their employees to carry over more sick time, if they offer a higher limit, employers who offer their workers paid time off at the beginning of the year are not required to allow them to carry their sick time over to the next year.
The bill also eliminates language allowing employees to bring a civil suit against their employer for violations of the law, and allows employers to take action against employees who use their sick time for a reason not approved by the law or for failing to give proper notice.
Employees can use paid sick time to address their physical or mental health needs or the needs of a family member, for meetings at a child's school or a place of care tied to a child's health, disability or the effects of domestic violence or sexual assault on the child if the child is a family member.
Survivors of domestic violence or sexual assault and family members caring for them can also used their sick time to obtain medical care, psychological care, victims services, legal services, to relocate due to domestic violence or to participate in any legal services.
It can also be used if the employees workplace is closed due to a public health emergency, to care for a child or family member whose school or workplace is closed due to a public health emergency, or if health authorities or a health provider has determined the employee or one of their family member's presence would risk exposing others to an infectious disease.
While opponents of the court-mandated sick leave changes argued it would allow employees to no-call no-show for three days without consequence, the final version of House Bill 4002 requires employees to provide notice as soon as practicable, unless employers provide their workers with a written policy on how to provide notice for unexpected sick time.
Just after 10:40 p.m., the Senate voted to return the amended House Bill 4002 to the House, with 26 votes in favor and 10 in opposition.
The bill received full support from Republicans, alongside Senate Majority Leader Winnie Brinks (D-Grand Rapids), Senate Majority Floor Leader Sam Singh (D-East Lansing), Hertel and Sens. Veronica Klinefelt (D-Eastepointe), Sean McCann (D-Kalamazoo), Jeremy Moss (D-Southfield), Dayna Polehanki (D-Livonia) and Paul Wojno (D-Warren).
After passing the Senate, the matter was taken up by the House where it was approved in an 89-21 vote.
Under House Bill 4002, Michigan will have one of the strongest sick leave policies in the nation, Brinks said, with Singh noting that no other state has a 72-hour paid sick leave requirement for businesses with more than 10 employees, with the closest policies coming in at 56 hours.
When asked if there were any concerns as to whether the governor would sign the bills before midnight, Singh said Whitmer's team was aware of the conversations happening over the past number of days, but that he would leave the final decisions to her.
While the deal brokered between the House and the Senate was better than the status quo, Senate Minority Leader Aric Nesbitt (R-Porter Twp.) remained critical of the chamber's Democratic majority.
'Republicans have been calling on action since August, and it's unfortunate that, like college students waiting till the last minute to finish up their research paper, the Senate Democrats waited till the last minute to go ahead and pass some legislation that will help save tens of thousands of restaurant jobs here in the state,' Nesbitt said. 'Once again, our Republicans took the lead here in the House and in the Senate, as a majority of Republicans voted for a deal, whereas only a minority of the Democrats actually voted for it,' Nesbitt said.
Only eight Democrats voted for each of the bills in the deal of the 19 Democratic members serving.
However, while looking at the wins Republicans were able to secure in this package, it's not about Republicans and Democrats, Nesbitt said.
'It's about working families. It's about our small businesses. It's about trying to grow our economy. Unfortunately, this isn't perfect, but it's a lot better than what would have gotten enacted at 12:01 tomorrow morning,' said Nesbitt, who announced last month that he is seeking the GOP nomination for governor in 2026.
During a press conference earlier in the day on Thursday, Michigan House Speaker Matt Hall (R-Richland Twp.) stressed the importance of finding a deal on minimum wage and sick leave policies.
'This is really critical to every worker in Michigan, and every small business in Michigan that we come to the center and make a deal here, because workers are about to lose their jobs, small businesses are about to close. You're going to see restaurant workers potentially losing their jobs and their pay getting cut and you're going to see many restaurants close,' Hall said.
'If we don't have a deal, it will be an absolute crisis for our state… Some of these employers, they don't even know what their workers are supposed to be paid tomorrow. You look at some of these smaller companies, they're not ready for these new changes in law to take effect tomorrow, and so you're gonna have total chaos,' He said.
After the vote, State Rep. Bill G. Schuette (R-Midland), who chaired the House Select Committee on Protecting Michigan Employees and Small Businesses that handled the House's tipped wage and paid sick leave proposals, said this deal was the first trial balloon of the state's divided government, with Republicans winning a 58-52 majority during the previous election.
DeBoyer said the deal was a testament to Hall's leadership and the strategy of the House Republican caucus. 'If you pay attention, this is how we're going to maintain in the next two years, things that matter to the citizens of the state of Michigan, So this is just one small step, and I think you're going to continue to see this behavior,' DeBoyer said.
While the minimum wage changes await action from the governor, they may also face another hurdle with a national group representing restaurant workers and service employees announcing its intent to offer a referendum on the bill.
In a statement, One Fair Wage criticized the Legislature's efforts to roll back the Supreme Court's minimum wage and the tipped wage changes.
'The Michigan Supreme Court ruled that these wage increases should be implemented, yet lawmakers are attempting to roll them back before they even take effect,' said Saru Jayaraman, the president of One Fair Wage. 'We're mobilizing to ensure voters — not politicians — have the ultimate say in whether these protections are upheld.'
Under the state's referendum process, citizens can challenge newly-passed laws by gathering signatures from voters. If One Fair Wage's volunteers gather 223,099 signatures, the law would be suspended and placed on the ballot, where voters will determine whether or not it takes effect.
Staff Reporter Anna Liz Nichols contributed to this report.
SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX