Michigan's new minimum wage - here's what it could go up to as state seeks clarification

The Michigan minimum wage is about to go up - here's why

A complicated court case was finally settled in Michigan's high judicial office. It had to do with the constitutional bounds of a legislature. But it's workers and business owners that will feel the effects.

(FOX 2) - Following a monumental decision from the Michigan Supreme Court last July, multiple departments are seeking clarification about how to calculate what the state's next minimum wage should be.

In a filing with the high court, the attorney general asked for guidance on behalf of the Department of Treasury and Department of Labor and Economic Opportunity - requesting help determining both what the minimum wage should be when it takes effect in February 2025 - and what formula it should use for annual increases.

The treasury offered five options for calculating that rate, with its intended method setting the new wage at $12.48 in 2025.

That figure was determined by using inflation data and the initial minimum wage rate that was intended when the law passed in 2019.

It would rise each year by the following rates:

2025 - $12.48
2026 - $13.29
2027 - $14.16
2028 - $14.97

In 2029 and years afterward, the treasury would calculate the annual minimum wage change using the same method in 2028.

Supreme Court repeals Adopt and Amend

Why would Michigan's Supreme Court go up in 2025? Because the state supreme court determined a previous ballot proposal that originally raised the minimum wage starting in 2019 was unconstitutionally changed after it was adopted by the legislature.

In their ruling announced July 31, the high court said the legislature's decision to adopt and amend a ballot proposal, watering down how high the minimum wage would increase as well as neutering new earned sick time rules, was illegal.

The 4-3 vote reversed a Court of Appeals' ruling and said the legislature's decision infringed "upon people's reserved power."

But the ruling left open questions about how the state should calculate the revised minimum wage.

State seeks clarification

In a request filed with the state supreme court on Aug. 21, Dana Nessel asked for clarification from the court in how it should determine the new wage. That's because the treasury "believes there exist ambiguities" in implementing the court's ruling.

"Given the broad and significant nature of the Wage Act and its delayed implementation, it is crucially important that all public and private actors have clarity as to how the Court’s remedy should be implemented," the filing read.

It gave the court a deadline of Sept. 15 for clarity before moving forward with the formula it believes is correct. The deadline for establishing the methodology is Nov. 1, 2024.

At the heart of the confusion is how the state should determine the end date for calculating inflation, with the court providing July 31, 2024 as the end date but not offering a beginning date.

It offered five different options for adjusting wages, including:

Option 1 – bring the statutory minimum wages in Section 4(1) current to July 31, 2024, through an inflationary catch-up beginning January 1, 2019;
Option 2 – look back 12-months before July 31, 2024, consistent with the 12-month provision in Section 4(2);
Option 3 – strictly apply Section 4(2) assuming a year-over-year inflation analysis beginning in September 2021;
Option 4 – strictly apply Section 4(2) assuming a 12-month averaging analysis;
Option 5 – Apply a rolling start year for each of the years and enumerated wages set forth in the Wage Act, Section 4(1)a–d, while maintaining a July 31, 2024 end date.