BY MIKE KILLBREATH
CCN Executive Editor
LANSING (CCN) — Michigan Governor Gretchen Whitmer signed bills into law Friday (Feb. 21, 2025) to preserve tipped wages of restaurant serves as is for the rest of 2025 while raising minimum wage for everybody else and implementing a new law for sick leave pay.
The Michigan Senate put the finished touches to a bi-partisan compromise on Thursday. The Republican-led House of Representatives voted a day earlier to approve a measure to scale back an increase in the state’s minimum wage for tipped workers that’s set to take effect on Friday.
The bill passed 69-40 with 11 Democrats joining all 58 Republicans to approve a measure passed Feb. 12 in similar bi-partisan fashion by the Michigan Senate.
The bill returned to the Michigan Senate with the House revisions, before Whitmer signed it into law.
She said, “Michigan workers deserve fair wages and benefits so they can pay the bills and take care of their family, and small businesses needs our support to keep creating good jobs in Michigan. I’m proud to sign these two bi-partisan bills into law that will raise wages, ensure workers can take time off to care for themselves or their loved ones, and continue growing our economy,. This common sense compromise was made possible by the Republicans and Democrats who worked together to forge a fair, bi-partisan deal. I hope we can build on this momentum to keep passing common sense, bi-partisan legislation that makes a real difference in people’s lives. I’ll keep working with anyone to protect working families and make sure our economy is competitive."
She had called on lawmakers last week to reach a bi-partisan deal on the minimum wage debate and paid sick leave debate before court-ordered changes on both policies would have taken effect on Friday. The Governor suggested the possibility of extending negotiations, but lawmakers instead had continued to scramble to reach agreements on each issue ahead of the Friday deadline.
While a bi-partisan deal in each chamber was reached on the minimum wage issue, changes to a paid sick leave bill had to still be negotiated between House Republican leaders and Senate Democrat leaders.
Democrats have a 39-to-38 advantage in the Michigan Senate with one open seat that was vacated by Democrat Kristen McDonald-Rivette when she won a seat in the U.S. Congress in November. Republicans won control of the State House in November. They now have 58 seats, compared to 52 by Democrats.
The Michigan Chamber of Commerce issued a statement as follows: "The countdown is on to Feb. 21, the date the Michigan Supreme Court’s monumental decision on earned sick time and minimum wage will take effect, and the Michigan Chamber has been working hard to help members understand their compliance obligations and lawmakers understand the negative implications the decision could have on employers and workers alike — urging a bipartisan solution.
Michigan's new paid sick leave law, known as the Earned Sick Time Act (ESTA), applies to all employers in Michigan, regardless of size.
The new policy would allow employees to earn one hour of sick leave for every 30 hours worked, employers with 10 or more employees must provide 72 hours of paid sick leave per year, employers with fewer than 10 employees must provide 40 hours of paid sick leave per year plus 32 hours of unpaid sick leave, new employees may have to wait 90 days before using accrued sick leave and re-employed employees within six months would be considered to have continuous employment.
A Michigan Supreme Court ruling last summer set the current minimum pay requirement for tipped workers at 38% of the standard minimum hourly wage and was to jump to 100% of the standard in 2030. The new bill will move the threshold to a cap of 50% in 2031, if signed by Governor Whitmer.
The Michigan Senate reached a bi-partisan deal on Thursday night (Feb. 13, 2025) to preserve wages as is for tipped restaurant servers, and the House decided likewise to keep wages as is for servers who depend on tips.
Linden's Mike Mueller and Davison's David Martin had been leading the fight in the State House to stop the higher wages from taking effect on Friday (Feb. 21, 2025).
They voted Wednesday to pass the bill approved by the State Senate last week.
Also voting with them from the Metro Flint regional area were Phil Green of Millington, Matt Bierlein of Frankenmuth and Brian DeGole of Antrim Township.
Voting no were Democrats Cynthia Neeley of Flint and Jasper Martus of Flushing.
More than 1,000 servers marched on the State Capitol last month to protest the changes from taking effect on Feb. 21 but their wishes were ignored when lawmakers recessed in their final session before the end of the year.
The situation arose when Republicans acted to circumvent a statewide vote by residents in 2018, according to a State Supreme Court ruling.
Senator Curtis Hertel, a Detroit Democrat, tried to get an alternate version passed to phase in higher minimum wages to waiters and waitresses but several of his fellow Democrats joined with Republicans to oppose his idea before last week's compromise.
The Michigan Senate's bi-partisan deal pushed by Republicans won with eight votes from Democrats joining 12 Republicans in a bill negotiated with House Republican leaders to keep the tipped minimum wage at 38% for the rest of 2025. The minimum wage would then rise to 40% in 2026, an additional 2% at the beginning of each new year until reaching a cap of 50% on Jan. 1, 2031.
The Michigan Restaurant Association (MRA) had warned that letting the higher hike take effect would lead to hundreds of restaurants closing across the state, impacting thousands of jobs.
A statement by the MRA said: "The impact of losing the tip credit on the industry would be immediate and catastrophic. Data shows that one in six restaurants would close their doors forever and 40,000 (to) 60,000 restaurant jobs would be eliminated if the tip credit was not saved. The MRLA is continually fighting for a common-sense solution to preserve the tip credit — and Michigan's hospitality industry."
Many Democrats supporting the higher wages said it would allow residents to stop paying tips on their meals at restaurants.
Restaurant servers suggested, however, that tips for many at upscale restaurants lead to wages between $25 per hour and $30 per hour. Currently minimum wage is guaranteed by forcing employers to make up the difference if tips fall short of the minimum wage of $10.56.
The Michigan Chamber of Commerce issued a statement earlier in the day on Thursday last week that said, "While the issues being negotiated are complex and politically charged, we continue to advocate on behalf of our members for meaningful amendments to the new law and believe a deal can be struck. The list is long but not unworkable through good faith negotiations. Key provisions that must be addressed include advanced notice, allowing more flexibility for employers wishing to keep one paid time off (PTO) bank, carryover caps, frontloading, eliminating the rebuttable presumption and private right of action, and more. We also continue to call for exemptions for small businesses and certain classifications of workers (part-time, seasonal, etc.), but those exemptions are controversial in the Senate."
The bill passed last week in the Senate and approved Wednesday in the State House would impose a $2,500 fine for any restaurant owner who fails to ensure that tipped workers get paid at least minimum wage if tips don't equal the new higher minimum amount that takes effect on Friday for all other Michigan employees.
The regular minimum wage will rise to $15 per hour by Jan. 1, 2027 and then be adjusted annually, based on the consumer price index for the Midwest region.
The current minimum wage of $10.56 per hour will now move up to $12.48 on Friday for all other employees while the tipped minimum will remain at $4.01 until the end of 2025.