Michigan lawmakers struck down a bill that would have phased out the tip credit after reaching a compromise that will speed increases in the minimum wage.
The compromise, which played out in the wee hours late Thursday, beat by minutes a court mandate on legislation that was scheduled to go into effect at midnight. The state Supreme Court had ruled that the state legislature violated the state constitution when the GOP-led legislature tempered measures that were passed after a threatened ballot initiative.
In addition to the increase in minimum wage, one of those measures called for eliminating the tip credit. But, as the court battle played out, restaurant industry advocates pushed to preserve use of the sub-minimum wage for tipped workers.
Under the last-minute compromise, the tip credit survived, though the amount of the tipped wage will increase to be 50% of the state’s minimum wage by 2031, according to the Associated Press.
Starting Friday, the state’s minimum wage increased to $12.48 per hour, up from $10.56, with a tipped minimum wage of $4.74 an hour.
The non-tipped wage will increase to $15 per hour by 2027, with annual inflation adjustments after that. Under the earlier version of the bill, the wage wouldn’t have hit $15 per hour until 2029.
In addition, businesses with 10 or fewer employees will either offer five days of paid sick leave per year, or one hour for ever 30 hours worked. Larger businesses must offer nine days of sick leave.
Gov. Gretchen Whitmer signed the bill on Friday.
“With Governor Whitmer’s signature today, thousands of community restaurants and tens of thousands of servers and bartenders can exhale, knowing their voice was heard,” said Justin Winslow, president and CEO of the Michigan Restaurant & Lodging Association, in a statement. “They can now begin the work of planning for their collective future with the knowledge that a tip credit has once again been preserved.”
To the labor activist group One Fair Wage and its leader Saru Jayaraman, Winslow added that it’s time to “pack up shop and head back to California.
“Michigan restaurant workers did not ask for their help and they do not want it, now or ever,” Winslow said. “Like Massachusetts, Michiganders are over One Fair Wage’s disingenuous proclamations and know deep down that our restaurants have been through enough the last five years. Michigan restaurant operators simply need to be left alone to pursue peace and prosperity, and we will be there every step of the way to help them secure it.”
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