As Michigan minimum wage fight rages, bipartisan plan would keep tipped rate

• Efforts to alter Michigan’s new sick leave and minimum wage laws could be coming under a House-backed bipartisan bill package
• Business leaders are supportive of the policy, which calls for keeping Michigan’s tipping credit but slowly bumping up minimum wage to $15
• Others want lawmakers to hold off on alterations before the law takes effect in 2025 as Democrats remain tightlipped about lame duck plans

LANSING — As calls grow to modify pending changes to Michigan’s minimum wage and sick leave laws, a bipartisan team of lawmakers say they may have the solution: Legislation to keep lower tipped wages for workers but still raise the minimum wage to $15 an hour before the end of the decade.

“The last thing we want to do for employees and employers is essentially hamstring the entire business community,” said state Rep. Graham Filler, R-Duplain Township, who is also working with a Democratic colleague on potential changes to sick leave rules set to take effect next year. 

Yet, as some officials work behind the scenes with businesses and employees in favor of altering the change, others — including those with the One Fair Wage advocacy group, which has spearheaded efforts to phase out tipped rates nationwide — say alterations are premature.

“This is a good policy … If there are tweaks that can be made later down the line, we can look at that later,” state Sen. Stephanie Chang, D-Detroit, told reporters last week at a One Fair Wage event.  

“For right now, I think it's really important to let the law take effect the way that Michigan voters asked for it to go.”

The Michigan Supreme Court in July ruled that a Republican-led Legislature erred in 2018 when it adopted and subsequently modified a citizen initiative to raise the state’s minimum wage and eliminate the state’s tipping wage — currently $3.93 an hour — during the same legislative session.

Related:

• In Michigan House, time for Democrats is running out. What to expect
• What to know about Michigan’s pending minimum wage changes
• As Michigan moves toward $15 minimum wage, workers rally to keep tip system

The intent of that petition will now take effect in February 2025, phasing out the state’s lower tipped wage and raising Michigan’s current $10.33 an hour minimum wage to just shy of $15 by 2028. 

Businesses with 10 or more employees will also be required to provide up to 72 hours of paid sick leave per year, while smaller firms will have to provide up to 40 hours per year. Unused sick time could rollover year-over-year.

Industry leaders argue the sick leave changes are too rigid and could mean less flexibility for employees at firms that already have more generous policies. And elimination of the tipped wage, they say, could upend the state’s restaurant industry still struggling to recover from COVID-19 losses. 

Enter state House legislation introduced earlier this month, which would still raise Michigan’s minimum wage to $15 by 2029 but leave the state’s tipping wage at its current rate. A companion bill tackling the sick leave change is “essentially just a shell bill waiting to get filled” with policy still being worked on, said Filler, the House Republican helping lead the effort. 

He feels confident the package he’s worked on with state Rep. Nate Shannon, D-Sterling Heights, will be able to pass through the Legislature and land on the governor’s desk before year’s end.

Sen. Thomas Albert, R-Lowell, is leading a separate effort to change the laws in the state Senate, but his plan appears less viable as he does not have any Democratic co-sponsors. 

Democrats currently control the state House and Senate, but Republicans will take over the lower chamber in 2025. Lawmakers are due back in Lansing on Dec. 3 for what will be the final month of a Democratic trifecta with Gov. Gretchen Whitmer. 

Jess Travers, a spokesperson for House Democrats, told Bridge on Monday that “the possibilities are endless” for legislation to pass during the lame-duck session. She stopped short of saying whether reforming the pending sick leave and tipped wage laws will be a priority. 

The case for making a change

Justin Winslow, president of the Michigan Restaurant and Lodging Association, said he’s fielding daily phone calls from business owners contemplating heavy layoffs before year’s end “as a way to mitigate what they know will be lost in terms of revenue.”

If the Legislature does not act before then, he said, those owners will pull the trigger — resulting in a “pretty significant job loss” that Winslow believes is only liable to worsen the closer it gets to Feb. 21. At that time, the Michigan Supreme Court order will go into effect as written.

But before then, Winslow believes there is enough support in the state Legislature to keep that from happening. He referred to House bills a “realistic conversation” on finding a middle ground between what’s coming in February and what businesses could weather.

“There’s a growing bipartisan consensus … around this concept of a responsible increase that’s clear and known over several years to get to $15, but also retaining a tip credit,” he said.

While some smaller restaurants might have issues with paying a $15 minimum wage, “given the amount of time that is in this bill … they can plan more effectively than the alternative.”

Save MI Tips, a group advocating for the preservation of the tip credit for servers and bartenders, argues that eliminating the lower wage rate will ultimately end the practice of consumer tipping in the state. 

The organization rallied at the state Capitol earlier this year and plans to do so again on Dec. 10, this time in the hopes that this time lawmakers will be more receptive to their message of retaining the tipped credit. 

Many Democrats are open to the change, Save MI Tips spokesperson John Sellek told Bridge last week. If the House-backed legislation went up for a vote tomorrow, “it could pass with a supermajority, easily,” he predicted.

“It’s not a partisan issue, it’s an economic issue,” said Sellek, arguing labor groups have politicized the issue. 

Earlier this year, seven of the state’s largest unions urged lawmakers in a letter to “stand firm in support of these worker gains and reject any efforts to obstruct or undermine them." 

Sellek believes that letter shut down any attempts to reach an earlier consensus, but with the November election over and the clock now ticking for Democrats, he said the group has “been given a reason to be very hopeful that there will be a hearing” on the package. 

The case for leaving it be

It’s not that proponents of phasing out the state’s tipped wage want lawmakers to do nothing in the last few weeks of the legislative year, One Fair Wage’s Michigan interim director Sam Taub told Bridge last week. 

Instead, he said the group wants lawmakers “to maintain the promise that they made to us through this ballot measure” they adopted and quickly scaled back in 2018 — a move the state Supreme Court ruled unconstitutional.

Taub was among a handful of people who gathered in Detroit last week to advocate for phasing out Michigan’s lower minimum wage for tipped workers, which will begin to happen next year if the Legislature does not intervene.

A former server himself, Taub said restaurant workers concerned about the pending change should “stop thinking about the really good days” when it comes to collecting tips from patrons.

“I want us to start thinking about the bad days, where you’re standing around, doing nothing, and making maybe $20 (in tips),” he said. “We do, in a lot of cases, rely on luck. … We shouldn’t have to rely on having a good day and having a lot of people coming in every day to make a stable living.”

Seven states — Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington — have already done away with tipped wages. Tipped employees in those states instead make a standard minimum wage, with the possibility of still collecting tips on top. 

Research is split on if this is a net positive or negative for the service industry.

Dave Woodward, an Oakland County Commissioner and former state lawmaker, said he believes Michigan should “absolutely” join the ranks of states that have transitioned away from having a tipped wage. 

He disputed claims that eliminating the lower wage for tipped employees will hurt Michigan’s business community or restaurant workers. 

“This is the same lobby that schemed with the Republican Legislature to adopt the law and then wait until after the election and gut the law,” said Woodward, who serves as an advisor for One Fair Wage group. 

“When they’re saying the sky is going to fall,” he added, “they’re just wrong.”