The Senate passed a bill that will gradually bring the tipped wage for waitstaff and other service industry workers up to 50 percent of the minimum wage beginning in 2031, about six years from now.
After 8 p.m. Thursday, the Senate passed 20-12 legislation addressing the Michigan Supreme Court’s adopt-and-amend ruling from July 2024.
Democratic Sens. Sarah Anthony (D-Lansing), Rosemary Bayer (D-Keego Harbor), Darrin Camilleri (D-Trenton), Mary Cavanagh (D-Redford Twp.), Stephanie Chang (D-Detroit), John Cherry (D-Flint), Jeff Irwin (D-Ann Arbor), Sean McCann (D-Kalamazoo), Mallory McMorrow (D-Royal Oak) and Sylvia Santana (D-Detroit) voted against SB 8 , which was amended Thursday evening. Together, they represented more than half of Democrats’ 19-seat caucus.
Republican Sens. Jon Bumstead (R-North Muskegon) and Jim Runestad (R-White Lake) opposed it, as well.
Meanwhile, Sens. Kevin Daley (R-Lum), Erika Geiss (D-Taylor), Ruth Johnson (R-Holly), Ed McBroom (R-Waucedah Twp.) and Rick Outman (R-Six Lakes) were absent from Thursday night’s votes. SB 8 was not taken up for immediate effect, which is needed by two-thirds of senators to ensure legislation can be instantly implemented while lawmakers are still in session for the year.
“I’m hopeful we’ll have productive conversations throughout the next week in the House, and we’ll cross that bridge when we get to it,” said Sen. Kevin Hertel (D-St. Clair Shores) on his SB 8. “I’ve heard loud and clear from people across my district, whether they are business owners . . . waitresses, waiters, bartenders…this was going to impact them in a negative way, and they wanted something to change here.”
Under SB 8 , the tip credit system will remain at 38 percent this year, and will rise by 2 percent afterward until being capped at 50 percent.
While speaking to the Senate Regulatory Affairs Committee on Tuesday, Sean Egan, the deputy director of Michigan’s Department of Labor and Economic Opportunity (LEO), explained the average tipped employee in Michigan is earning about $17 to $19 hourly.
In 2023, based on data from the U.S. Bureau of Labor Statistics, LEO gathered that waitresses and waiters in Michigan earned a mean wage of $34,520 to $39,590 annually, above nearby states like Ohio, Wisconsin, Indiana and Illinois.
During 2023, restaurant employees in Chicago were earning $9.48 hourly with tips not included, but their mean yearly wage was between $29,210 and $34,250.
“This is a good first step for Michigan’s tipped workers and their small businesses all across our state. If it gets done, this agreement would keep thousands of people on the job, help them make more money to support their families, and keep many of our beloved local businesses open for generations to come,” said House Speaker Matt Hall (R-Richland Township) in a statement.
On Tuesday evening, Hall proposed a compromise to Senate Democrats after House Republicans originally advocated to keep the sub-minimum wage at 38 percent. Hall said he offered raising the tipped wage up to 50 percent gradually because “I believed this was a real bipartisan solution that could bring everyone together.”
“I knew we would never all agree on a plan that delivered wins just for big labor lobbyists or big businesses. It had to be a solution that prioritized the working people caught in the middle and where everyone gave a little,” he said. “I’m glad the Senate Democrats ultimately agreed.”
Senate Minority Leader Aric Nesbitt (R-Lawton) described his support of the 50 percent provision as a “forced comfort.” On Wednesday morning, the Governor revealed that if House and Senate leadership couldn’t reach an agreement, she was suggesting to postpone the court’s start-date from Feb. 21 to July 1.
He said the Michigan Supreme Court put up a “big close for business sign” in its July decision.
“You’re already seeing restaurants making those changes. There (are) restaurant workers already losing their jobs. There’s restaurants eliminating full-service items,” Nesbitt said. “This is a slower time for a lot of these businesses, and punting it to July – in the busiest time – I don’t think is a good option.”
The next issue to be addressed by the Senate is the paid sick time changes, as the court’s ruling will also require businesses with 10 or more workers to immediately provide 72 hours of paid sick time next Friday, with one hour of paid sick time accrued for every 30 hours of wages earned.
Opposition to the court-ordered reform have included the Michigan Manufacturers Association, the National Federation of Independent Businesses (NFIB), the Michigan Association of Ambulance Services and the Health Care Association of Michigan.
Altogether, they have expressed concerns of the upcoming Earned Sick Time Act (ESTA) permitting “no-call, no-show” practices with limited room for repercussions, as well as mandating three years of reporting and documenting mandates. Furthermore, some of the groups have argued the new act blocks them from supplying their own unique time-off benefits, like offering paid time off that can be used for anything without distinguishing sick time from vacation time.
“Let’s get sick leave taken care of,” Nesbitt said. “I’m already hearing from manufacturers, from small businesses, from workers…saying I have generous paid time-off, and now they’re saying ‘I have to limit that to have a one-size fits all sick-leave policy…’ I’m sorry, that’s not going to work for us here.”
State Director Amanda Fisher of the NFIB said to MIRS that she hopes a similar common sense compromise as Thursday night with SB 8 can be reached on ESTA including “an exemption for small Main Street businesses.”
On Wednesday, Nataki Rhodes of Chicago, the National Lead Organizer of One Fair Wage – a large backer of eliminating Michigan’s tipped wage system – said it’s “a bunch of malarkey” to say anyone doesn’t want more money in their pocket, which she sees putting waitstaff on minimum wage as providing.
“If you hear people say ‘oh no, I’m fine with just making $4 and I’m cool with that,”‘ they’re really not cool with that. Their bosses had them come testify, as in Chicago. They did the same to us,” Rhodes said. “Tips have not gone down in Chicago. Tips are up higher in Chicago, and workers have not lost their jobs due to wages going up.”
One Fair Wage came to the Capitol on Wednesday with more than 95,000 signatures of restaurant workers signed on to supporting the phasing out of Michigan’s tipped wage, collected from 2020 through present day. According to One Fair Wage President Saru Jayaraman, they confirmed respondents were restaurant workers because “we got to see their place of employment and their pay stub.”
“They shouldn’t even be touching something that voters asked for and the Supreme Court decided on. So no, we will not accept any delay in workers getting their hard fought wage increase,” Jayaraman said on Wednesday.
The July Supreme Court ruling dealt with 2018 ballot initiatives to reform Michigan’s wage and paid sick time statutes. The court determined that lawmakers unconstitutionally adopted and altered the proposals, essentially blocking them from appearing on the statewide ballot about seven years ago.
Through its ruling, the court scheduled Feb. 21 changes mirroring the proposals’ language, including bringing Michigan’s sub-minimum wage for waitstaff and bartenders up from around $4 hourly to $6 next week.
Right now, such employees are paid a tipped wage worth 38 percent of the minimum wage, and under the court’s ordered reforms, the tipped system would be gradually phased out through 2030, switching the workers to the full minimum wage.
Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter
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