The Michigan Supreme Court made a landmark decision by voting 4-3 on unconstitutional legislative amendments that changed the way that minimum wage, tip, and paid sick leave are handled in the state.
Change to the minimum wage will go into effect on February 21, 2025, but business owners do not know what specifics will be upheld at that time.
What Changes Were Made in the Past
Back in September 2018, the Michigan legislature adopted new laws as part of a proposed ballot measure instead of allowing residents to vote on the matter.
The measures were the Earned Sick Time Act (ESTA) and the Improved Workforce Opportunity Wage Act (IWOWA). However, during the legislative season, there were substantive amendments to both of the acts and several legal challenges have followed.
Violating the Constitution
In July of 2022, a Michigan Court of Claims judge noted that the previous legislature amendments violated the state’s constitution.
Another discussion was held in January 2023 by a three-judge panel at the Michigan Court of Appeals, who reserved the decision and upheld the amendments. However, years of litigation later, and six years after the ESTA and IWOWA were originally created, the state supreme court decided that the amendments to be reinstated.
Changes to the Minimum Wage
The main change people are concerned about in the state is the amendment to the minimum wage. The measure initially intended to raise the minimum wage in the state to $10. However, due to the elapsed time, that number will be raised even higher to account for inflation.
As of 2025, when the new laws are initiated, the minimum wage will likely exceed $10.56 according to the length of the time and the legislative maneuvers that have been upheld. The minimum wage is currently $7.25 an hour, which does not allow a healthy budget for an adult living alone or with a roommate.
Other Amendments That Will Be Upheld
Two other big changes will come in the state. Specifically, the minimum wage for tipped employees will now be 48% of the minimum wage. Often, servers and bartenders who make healthy tips rely more heavily on that as payment than the minimum wage.
As well, paid sick leave provisions in the ballot adopted by the legislature in 2018 will become legal again in Michigan to allow employees a specific number of paid sick days a month.
Employers and Employees Have Questions
Although the decisions that were handed down have made several big changes in the state, there are still a few pieces of business that have not yet been settled.
Specifically, people want to know what happens to paid sick leave that employers provide or what employees accumulate under the new law. Will the days be wiped out of grandfathered in? As well, many want to know if employers have an application to add more sick leave benefits under the new law in early 2025.
Michigan Lawmakers Respond to the Questions
The Michigan Department of Labor and Economic Opportunity’s Wage & Hour Division responded to several business owners’ questions and comments.
“The Department of Labor and Economic Opportunity is currently reviewing the court’s decision. We are committed to collaborating with the labor and business communities on educational outreach to ensure a thorough understanding and smooth implementation of the court’s ruling.”
Future Legislative Changes Are Possible
There are some possible complications allowed if the legislator and governor choose to amend the law by a vote.
It’s possible that elected officials might take issue with the revised minimum wage, tip, and paid sick leave standards and attempt to change them before being reinstated next year.
Minimum Wage Adjustments for Inflation
In February of 2025, the Michigan Supreme Court will amend the minimum wage to $10. However, there will also be amendments for inflation in the state.
Although the wage will increase to $10.65 in February of 2026, it is expected to rise to $12 per hour in February of 2028.
The Wage for Tipped Employees Will Also Rise
In addition to increasing the minimum wage for regular employees, tipped employees will also see their wages rise over time.
By February 2028, the minimum wage for tipped employees will be 90% of the minimum wage. They also expect that it will rise to 100% to adjust for differences in task difficulty.
The Wage Can Vary Based on Different Factors
Although the wage will be rising for a number of employees, there are some exceptions under the new law.
Employees who work under a certain number of hours or in specific industries have the ability to make even less than the current minimum wage.
