With ‘emergency deadline’ near, Michigan House approves tipped wage deal

• Michigan House finalizes compromise plan to speed up minimum wage increase by scale back tipped rate hike
• Deal is contingent upon negotiations over separate proposals to modify paid sick leave rules set to take effect Friday
• Without that deal, Republican House Leader Matt Hall predicts ‘chaos is coming’ for Michigan businesses, workers

LANSING — A bipartisan compromise to retain a subminimum wage for tipped workers is headed toward Gov. Gretchen Whitmer’s desk without a key component: A companion bill to scale back a court-ordered paid sick leave mandate set to take effect Friday. 

Fifteen Democrats joined most Republicans in the GOP-led House Wednesday to pass the wage legislation, but Speaker Matt Hall and colleagues predicted businesses will face dire consequences if Senate Democrats don’t agree to a deal on paid leave rules by Friday.

“We have two days before the ship goes down,” said Rep. Jamie Thompson, R-Brownstown Township. 

At issue are wage and sick leave increases proposed as part of a 2018 petition drive, scaled back that year by a GOP-led Legislature and recently reinstated by the Michigan Supreme Court. 

The court-ordered laws will require the state to raise its $10.56 an hour minimum wage to $14.97 by 2028, phase out a subminimum wage for tipped workers by 2030 and — beginning Friday — provide employees with between five and nine days of paid sick leave each year. 

Republicans, restaurant owners and some workers have urged preservation of the “tipped credit,” arguing its elimination could force owners to raise costs or close while discouraging tips that many servers rely on. Business groups say the sick leave rules are onerous and would be difficult to comply with.

The wage deal, approved last week in the Democratic-led Senate despite opposition from some progressives, would retain a lower wage guarantee for tipped workers but raise it from 35% to 50% of the regular minimum wage, which would reach $15 by 2027 and then be linked to inflation.

Legislative leaders have not yet struck a deal on paid sick leave, however, and the two bills are tie-barred together, meaning one cannot become law without the other passing. 

Related:

• Michigan lawmakers strike deal on wages and tips — but not sick leave, yet
• Whitmer: Delay Michigan wage, paid leave laws if no deal on changes
• Michigan House, Senate at odds as minimum wage and sick leave laws loom

A plan approved last month by the House would exempt any businesses with 50 or fewer employees from the new sick leave rules. A competing proposal from Senate Democrats wouldn’t exempt any businesses but would require small businesses to provide fewer days of paid sick leave to their workers. 

The Senate adjourned Wednesday without taking action on paid sick leave. Amid the ongoing negotiations, a contingent of activists and lawmakers have ramped up calls to let the sick leave policy go into effect unchanged.

“To be clear, the only people that the Republican legislation benefits are corporate, big money, stakeholders,” Rep. Phil Skaggs, D-Grand Rapids, said at a press conference. 

Even as a sick leave deal remains in the works, the Senate has yet to take a necessary two-thirds vote in order to make the proposed wage changes immediately effective. Doing so would require sign-off from 25 senators, but only 20 voted in favor of the legislation last week. 

But Rep. Bill Schuette, R-Midland, said passage of the wage legislation showed that when up against a deadline, the Democratic-controlled Senate and Republican-majority House are “able to come to some form of solution.”

Gov. Gretchen Whitmer last week suggested lawmakers vote to delay the wage and paid leave laws until July if they are unable to strike a deal. 

But House and Senate leaders met over the weekend and will continue to negotiate ahead of Friday’s “emergency deadline,” according to Hall, R-Richland Township. 

He proposed what he called a "middle-of-the-road" compromise on paid sick leave last week but said Wednesday Republicans are "going to have to reach a little more across the aisle" to finalize a deal. 

"We're going to keep meeting ... and then we'll act on it, hopefully tomorrow night,” Hall said, predicting the public will ultimately blame Democrats if a deal falls apart. 

“They’re going to have to meet us in the middle on a compromise, because if they don't, chaos is coming on Friday,” he said. “I mean, it's going to be a total disaster when all these policies take effect.”