LANSING, Mich. — Nearly six years after twin ballot proposals were passed by the state Legislature and then significantly changed by lawmakers, the original laws are being restored through a court ruling.
The Michigan Supreme Court issued an opinion Wednesday declaring the Legislature's actions in 2018 violated the state constitution. That decision undoes changes to the One Fair Wage proposals, which would have raised Michigan's minimum wage to just over $12 an hour by 2023, eliminated the different wage scale for tipped workers, and required paid sick leave by nearly all employers in the state.
The proposals had enough signatures to go to the ballot in 2018, but the Republican-led Michigan Legislature instead voted both bills into law before the November election. Lawmakers then amended them during the lame duck session after the election, slowing the rise in Michigan's minimum wage to $12.05 per hour until 2030. This action has been called "adopt and amend."
Several groups supporting the proposals sued the Michigan Attorney General's Office over the actions, because then Attorney General Bill Schuette issued an opinion saying the state Legislature had power to adopt and then amend initiative proposals in the same session.
By the time the groups filed suit, Dana Nessel had been elected into office, and she supported the lawsuit. The Court of Claims judge then ordered the state of Michigan to be added as a defendant in the case so the Legislature could defend its actions.
Ultimately the Court of Claims ruled in favor of the plaintiffs, but the state Court of Appeals overturned that ruling. An appeal to the Michigan Supreme Court played out this past winter, with oral arguments on Dec. 7.
Nearly eight months later the state's highest court ruled the adopt-and-amend opinion is unconstitutional in a 4-3 opinion.
READ THE FULL MICHIGAN SUPREME COURT DECISION
Now the changes to Michigan's minimum wage will return to the schedule laid out in the proposal, but with a new starting point of Feb. 21, 2025. Under the original proposal, the minimum wage would have risen to $10 in 2019, $10.65 in 2020, $11.35 in 2021 and $12 in 2022. Now those increases are scheduled to go into effect on these dates:
- $10 on Feb. 21, 2025
- $10.65 on Feb. 21, 2026
- $11.35 on Feb. 21, 2027
- $12 on Feb. 21, 2028
The Supreme Court's ruling also orders the state treasurer to account for inflation with these minimum wages, which would increase these numbers even more. That calculation must be completed by Nov. 1, 2024.
The changes to the tipped worker's wage will follow the same schedule for the increase in the minimum wage. Employers who have tipped employees will be allowed to claim less and less of the tips against the hourly wage paid to workers.
In 2025 tipped employees must be paid at least 48 percent of the minimum wage; in 2026 that increases to 60 percent; then 70 percent in 2027; 80 percent in 2028. On Feb. 21, 2029, the tip credit will cease to exist, allowing tipped workers to receive at least the minimum wage with tips being an additional source of income.
The other proposal, the Earned Sick Time Act, will require most employers in the state to provide at least 72 hours of paid sick leave each year to employees. Any employee, even part-time or seasonal, must receive one hour of paid medical leave for every 30 hours worked.
In its ruling the Michigan Supreme Court ordered the restored Sick Time Act to also go into effect on Feb. 21, 2025.
Ruling Reaction
The group behind the proposals called the Supreme Court's decision a first of many victories.
“This is a great day for the more than 494,000 workers in Michigan who are getting a raise. We have finally prevailed over the corporate interests who tried everything they could to prevent all workers, including restaurant workers, from being paid a full, fair wage with tips on top," said Saru Jayaraman, President of One Fair Wage. “Today’s court decision not only ensures that all workers in Michigan receive a raise; it also makes Michigan the eighth state to end the subminimum wage for tipped workers, the first state East of the Mississippi to end the subminimum wage for tipped workers, and the first state anywhere in over 40 years to do so. It’s clear tipped workers don’t just need a tax exemption – they need living wages with tips on top!!!"
Michigan Attorney General Dana Nessel says the ruling is an, "affirmation of the power of direct democracy.”
“The Legislature cannot manipulate its power to undermine the will of the people," her statement continued. "This ruling sends a clear message that elected officials cannot disregard the voices of their constituents. I am glad to see the Court recognize and respect that the people reserved for themselves the power of initiative, a crucial tool meant to shape the laws that govern them.”
Senate Majority Leader Winnie Brinks (D-Grand Rapids) says her legal team is reviewing the court's opinion.
“Here’s what I know to be true: the Legislature has a responsibility to uphold the will of the people," said Brinks in a statement. "Additionally, the people of Michigan deserve clarity. The then-Republican majority made a deceitful bait-and-switch on the very people they were sworn to serve, and this lengthy battle was caused by their tactics. Regardless, today marks a new chapter where legislators and residents alike will have a clear understanding of the citizen initiative process.”
Michigan House Republican Leader Rep. Matt Hall (R-Richland Township) claims the changes to minimum wage will result in more job cuts by employers.
"Restaurants and other small businesses will have to raise their prices, tipped workers will take home less pay, and some people will lose their jobs. The court has ruled, and now it’s time for the people’s representatives to take action. While Democrats are out on the campaign trail, servers and bartenders are still hard at work. But they might be on the unemployment line soon if Democrats don’t come back and help House Republicans save Michigan jobs.”
The Michigan Restaurant & Lodging Association called the ruling an existential blow to hotels, cafes, and eateries across the state.
"As our recent industry operations survey illustrated, 40% of full-service restaurants in Michigan are already unprofitable, meaning this decision is likely to force more than one in five of them to close permanently, eliminating up to 60,000 jobs along the way," said President & CEO Justin Winslow. "We urgently call on the Michigan legislature to act swiftly, implementing a compromise solution that prevents this impending catastrophe before it is implemented. This action must consider the perspectives of both industry operators and tipped employees who have overwhelmingly expressed their preference to preserve the tip credit and the earning potential it provides. The future of Michigan's restaurant industry and the stability of Michigan’s overall economy hangs in the balance."
FOX 17 talked with the founder of One Fair Wage and the Grand Rapids Chamber of Commerce on the matter.
"Tipped workers in Michigan currently earn $3.75 as a direct legacy of slavery. It's a wage that impacts a workforce that's overwhelmingly women, disproportionately single moms," founder and president of One Fair Wage Saru Jayaraman said.
The Chamber expressed that they have been getting calls from small local businesses all day with concerns.
“Something that we’ve heard a lot from restaurants, service industry, their employees. About what it means for them. How are bills going to be impacted? How are those employee's wages going to be impacted? A lot of times tips drive a significant amount of employees wages. How is it going to change when it’s not really an option to do it that way?" VP of Governmental Affairs for the Grand Rapids Chamber of Commerce Josh Lunger said.
The Chamber of Commerce is hosting a Q&A for members.
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