Changes are coming to Michigan’s minimum wage and sick time requirements after a major ruling from the state’s highest court.
The Michigan Supreme Court ruled that it was unconstitutional for the Legislation to adopt-and-amend citizen-initiated petitions. This means the minimum wage and sick time laws, as originally adopted, will be reinstated.
Mothering Justice, Michigan One Fair Wage, Michigan Time to Care sponsored proposals known as the Improved Workforce Opportunity Wage Act (the Wage Act) and the Earned Sick Time Act. They collected enough signatures from Michigan voters to send the proposals to the ballot in the fall of 2018.
Instead of allowing these proposals to go to the ballot, Michigan’s Republican-led Legislature preemptively passed the proposals. After the election, in the same Legislative session, they voted to substantially scale back the laws and make changes that were requested by a business lobby that criticized the new requirements.
“In an effort to prevent this ballot proposal from reaching the November 2018 general election ballot, the Michigan Restaurant and Lodging Association worked tirelessly with the Michigan legislature to have them adopt the MI One Fair Wage Ballot Proposal and prevent it from going to the ballot,” the Michigan Restaurant and Lodging Association states on its website. “As demonstrated in other states, if the MI One Fair Wage ballot proposal had gone to the November 2018 General Election Ballot, it would have passed with overwhelming support.”
On July 31, 2024, the Michigan Supreme Court ruled that the actions taken by the Legislature in 2018 and 2019 to “adopt-and-amend” the voter initiatives were unconstitutional.
What does the ruling change?
The ruling raises Michigan’s minimum wage for all employees, phases out the tip credit, and makes changes to paid medical leave requirements.
Michigan’s minimum wage will be adjusted based on inflation rates each year, instead of a standard 23 cent per year increase.
Currently, tipped workers in Michigan earn a subminimum wage and tips are expected to offset the low hourly pay. After four years, employers will be required to pay tipped workers the full minimum wage and the tips they earn will be additional.
The ruling also means that employees will receive one hour of paid medical leave for every 30 hours worked. Before this ruling, employers were only required to offer sick time if they had 50 employees or more.
When does it go into effect?
Michigan’s reinstated Wage Act and the Earned Sick Time Act will go into effect on Friday, Feb. 21, 2025.
It’s unclear yet exactly what the minimum wage in Michigan will be on Feb. 21, 2025. The state treasurer has been instructed to calculate the amount based on inflation. That means the minimum wage will be $10 plus the inflation adjustment.
As of Aug. 4, 2024, Michigan’s minimum wage is $10.33 and tipped workers earn 38% of that for a total of $3.93 an hour. On Feb. 21, 2025, tipped workers will earn 48% of the minimum wage and that will increase over four years until February 21, 2029, when they will earn the full minimum wage.
How Michigan’s Wage Act will phase in
When the Legislature amended the Wage Act, it made it so that the minimum wage for tipped employees remained at 38%. The annual increases to the minimum wage were replaced by a 23 cent per year increase and the minimum wage would not have exceeded $12 until 2030.
Originally, the plan was to phase in an increased minimum wage over four years. In late 2022, the state treasurer was to begin adjusting the minimum wage every year to keep up with the inflation rate. It also phased out the tip credit, meaning tipped employees would have been earning the full minimum wage by this year.
In the recent ruling, the Michigan Supreme Court decided that the reinstated acts will be go into effect under a “revised schedule that links the gradual phase-in of minimum-wage increases to the same annual schedule as originally proposed, but set into the future, and accounting for inflation.”
Here is the plan the Michigan Supreme Court laid out for the minimum wage increases and tip credit phase out:
| Date | Minimum Wage | Tip Credit |
|---|---|---|
| February 21, 2025 | The minimum hourly wage will be $10.00 plus the state treasurer’s inflation adjustment, using July 31, 2024, as the endpoint for that calculation. | The tip credit will be 48% of minimum wage. |
| February 21, 2026 | The minimum hourly wage will be $10.65 plus the state treasurer’s inflation adjustment, using July 31, 2024, as the endpoint for that calculation. | The tip credit will be 60% of minimum wage. |
| February 21, 2027 | The minimum hourly wage will be $11.35 plus the state treasurer’s inflation adjustment, using July 31, 2024, as the endpoint for that calculation. | The tip credit will be 70% of minimum wage. |
| February 21, 2028 | The minimum hourly wage will be $12.00 plus the state treasurer’s inflation adjustment, using July 31, 2024, as the endpoint for that calculation. | The tip credit will be 80% of minimum wage. |
| February 21, 2029 (and after) | The state treasurer shall calculate the inflation-adjusted minimum wage | The tip credit will no longer exist. |
Michigan is not the first state to do this
There are already seven states that require employers to pay tipped employees the full state minimum wage before they receive tips. Those states are Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington.
One Fair Wage states that, “these seven states have higher restaurant job growth rates, small business growth rates, and tipping averages than Michigan; they also have one half the rate of sexual harassment in the restaurant industry and lost fewer restaurants during the pandemic than Michigan.”
“This is a great day for the more than 860,000 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.
“Back in 2018, we gathered more than 400,000 signatures to support raising wages for all workers in Michigan, including tipped workers, and effectively end the subminimum wage – a direct legacy of slavery. Republicans who controlled the legislature at that time recognized the popularity of raising the minimum wage and its power to mobilize hundreds of thousands of new, unlikely voters. In an attempt to undermine the democratic process, they adopted the measure to remove it from the ballot, and then planned to reverse the wage increase after the election. Thankfully, the court saw through this undemocratic maneuvering and blocked their efforts to suppress the will of the people.
“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!!! This is just the first of many more victories to come in a year in which key voter groups, especially young voters and voters of color, have named ‘the rising cost of living’ and ‘jobs with living wages’ as their top electoral priorities!”
Saru Jayaraman, President of One Fair Wage (July 31, 2024)
Earned Sick Time Act
The Earned Sick Time Act requires employers to grant employees one hour of paid sick time for every 30 hours worked each week. It made it clear that employees could use those hours for any reason related to physical or mental health (either their own or that of a family member).
It also noted that if an employee or anyone in their family was a victim of domestic violence or sexual assault, the accrued sick time could be used to address issues such as attending counseling appointments, court proceedings, or school visits.
It also specified that the same time-measurement increments used to determine the number of hours an employee worked each week had to be used when measuring the amount of sick time the employee used during an absence from work.
The Earned Sick Time Act prohibited employers from interfering with an employee’s attempt to use accrued sick time, though it did allow them to require documentation when absences went over three days.
When the Legislature amended the Earned Sick Time Act, they made it so it only applied to employers who employ more than 50 people. It also only required an employer to allow employees to use 40 hours of sick time each year and specified that sick time must be used in one-hour increments.