New tipped wage law clears Michigan House as debate continues on earned sick time rules

(FOX 2) - The Michigan House of Representatives approved a scaled back version of the state's incoming tipped wage law, which reduces the increase that restaurant workers would earn while speeding up an increase to the minimum wage.

The vote comes days before Michigan's new wage law goes into effect, which has roots in a court ruling stretching back to last year.

What we know:

The Michigan House voted 69-40 in favor of a watered down law that would increase the tipped wages that some workers would earn.

It amends a law that was scheduled to go into effect on Friday, Feb. 21. Instead of the minimum tipped wage rate being 48% of Michigan's minimum wage, it would be 38% of the minimum wage. 

The Michigan Senate passed the same bill last week following negotiations between Republican and Democratic lawmakers hoping to address concerns from small businesses who are concerned the wage hike could force them to close.

SB 8 pushes an upcoming minimum wage hike to next year, with plans for it to reach $15 by 2027 - a year earlier than planned. The increased minimum wage scheduled for Friday is $12.48 an hour. 

However, the bill also reduces the amount a worker who makes tips can earn. Instead of reaching 100% of the minimum wage by 2030, tipped workers would receive 50% of the minimum wage by 2031. 

Timeline:

The amended law includes the following schedule increase for minimum tipped wages:

• Jan. 1, 2026 – 40% of minimum wage
• Jan. 1, 2027 - 42% of minimum wage
• Jan. 1, 2028 - 44% of minimum wage
• Jan. 1, 2029 - 46% of minimum wage
• Jan. 1 2030 - 48% of minimum wage
• Jan. 1, 2031 - 50% of minimum wage

The amendment also changes the schedule of minimum wage increases:

• Feb. 21, 2025 - $12.48
• Jan. 1, 2026 - $13.73
• Jan. 1, 2027 - $15

What we don't know:

Still being negotiated is earned sick time, a third component of the wage hike rule that the Michigan Supreme Court ordered be adopted in July 2024.

Before the Michigan House voted, Speaker Matt Hall (R-Richland Township) told reporters getting a compromise through the legislature would require "some democrats to stand up."

"If they don't, chaos is coming on Friday. It's going to be a total disaster when all these policies take effect with their very confusing rules," he said.

Among the sticking points is whether small businesses will be exempted from earned sick time rules and when available sick time is administered to workers. 

The amended law, HB 4002, is tie-barred with SB 8, and one cannot take effect without the other also clearing the legislature. 

The backstory:

In 2018, a ballot proposal that called for raising Michigan's minimum wage was set to go before voters.

However, the Republican-majority legislature decided that instead of allowing the initiative to go on the midterm ballot in November, it would directly adopt the proposal into law.

Then, during the lame duck session - the period of time after election day but before the new governing session took effect - the legislature watered down the proposal.

The decision was the subject of a legal case that took years to move through the court system. Eventually, the Democratic-led high court ruled the decision was unconstitutional.

In addition to updating the state's minimum wage, the proposal also increased paid sick time while doing away with the current payment structure for workers that earn tips.