As Michigan moves toward $15 minimum wage, workers rally to keep tip system

• Michigan correctly interpreted an inflation order and should begin raising its minimum wage to nearly $15 by 2028, state Supreme Court says
• Court acknowledges “clerical” error in initial order, however, delaying phase out of lower wage for tipped workers by one year
• Restaurant and business owners push state legislature to change the wage and paid sick laws before they take effect

LANSING — Michigan will move forward with plans to raise its minimum wage to nearly $15 an hour by 2028 but should delay a full phase out of the sub-minimum wage for tipped workers until 2030 under an amended order released Wednesday by the state Supreme Court.

Responding to a request for clarification by state officials, justices acknowledged a "clerical” error in their blockbuster July ruling, which requires the state to implement minimum wage and paid sick leave rules proposed in a voter-backed 2018 petition drive the court determined was unconstitutionally weakened by Republican lawmakers.

However, the amendment “changes nothing of substance in the opinion,” wrote Justice Elizabeth Welch. 

The Michigan Department of Labor and Economic Opportunity had correctly interpreted court-ordered inflationary adjustments that will require a boost to the $10.33 minimum wage, beginning next year, according to the new order.

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That means the state should proceed with plans to raise the wage to $12.48 in February 2025, $13.29 in 2026, $14.16 in 2027 and $14.97 in 2028. 

The court decision and pending changes have sparked fears among business leaders, who have referred to the ruling as “a nightmare." Restaurant servers and bartenders who rallied at the Michigan Capitol on Wednesday urged the Legislature to retain the tipped wage. 

The Supreme Court's July order had directed the state to phase out the $3.93 minimum wage for tipped workers, raising it each year until it matched the traditional minimum wage by 2029. The amendment now clarifies the tipped credit system should instead be fully eliminated by 2030.

Attorney General Dana Nessel had requested clarification on the matter by Sept. 15. 

But because the state had not heard back by Sunday, officials were already preparing to “proceed with implementing” their interpretation of the initial ruling, Jason Moon, a spokesperson for the Department of Labor and Economic Opportunity, said earlier Wednesday. 

A look to the Legislature

Justices in July ruled that a Republican-led Legislature had inappropriately weakened 2018 legislation initiated by a petition drive by adopting and then amending it in the same session. But they left the door open to additional changes by the current Legislature, which is controlled by Democrats. 

Leaders in the state House and Senate have remained tightlipped on whether they’ll pursue any changes to the law, saying only that they are having “ongoing” conversations with necessary stakeholders. 

But restaurant industry officials are speaking out, saying the required wage changes could ultimately mean higher costs. Some servers and bartenders are opposed, too, as they fear elimination of a lower tipped wage will mean smaller paychecks if customers stop tipping.

“We didn't ask for this, and we are not out picketing for a higher wage,” said Marianne Hayoz, owner and operator of The Peppermill Cafe in Grand Rapids.

Hayoz joined hundreds of restaurant servers and bartenders on the Capitol lawn Wednesday, pushing for the state to stymie changes to the tipped wage, which under the court’s order, will be phased out over the next six years.

“Many of us are not even fully bounced back after the pandemic, and now we're being kicked down yet again with this whole tip credit thing,” Hayoz said. “It's like we just can't catch a break. The system is not broken. Please do not try to fix it.” 

Gov. Gretchen Whitmer has also not said whether she would support any changes to the minimum wage or paid sick leave rules before they begin to take effect next year. 

She previously said she would not push her legal team “to tell me before they’re ready” on how, or if, to pivot in response to the court’s ruling. 

The Michigan Senate has met twice since lawmakers recessed for the summer and the House has not voted on legislation since June 27, effectively stalling any forward momentum on the topic.

Union, GOP pressure

Meanwhile, legislators are now also facing pressure from unions — typically an ally of Democrats — to leave the laws alone. 

In a letter sent this week to House Speaker Joe Tate of Detroit and Senate Majority Leader Winnie Brinks of Grand Rapids, six separate unions called on the leaders to “reject any attempt to undermine this historic worker victory.”

The political calculus of addressing, or not addressing, the ongoing fight over tipped wage, minimum wage and sick time changes comes at a crucial time for Democrats, who are looking to defend their razor thin, two-seat House majority in the Nov. 5 general election. 

Senate Republicans, however, have introduced a plan to cut off the wage changes. While that plan is unlikely to advance given the party’s minority status in the Legislature, Republicans are lambasting Democrats for not meeting more regularly in Lansing to address the issue.

“Restaurant owners and servers are rightfully worried about the devastating toll this court ruling is set to take on their livelihoods,” Sen. Thomas Albert, R-Lowell, said in a Wednesday statement. 

“The harsh reality is that many restaurants and small businesses will not survive the economic blow that will be caused by this ruling — thousands of people are on the verge of losing their jobs, and inflation-weary customers will face even higher costs.”