Gov. Gretchen Whitmer signed legislation before noon Friday preserving a special tipped minimum wage and revamping the state’s new paid sick leave policy, marking the end of this chapter of policies originally pushed by progressive organizers more than eight years ago.
P.A. 1 and P.A. 2 of 2025 were filed with the Office of the Great Seal shortly after 1 p.m. Both have immediate effect and are effective as of 12:02 a.m. Friday morning.
The bills – SB 8 and HB 4002 – scale back changes to a law, which was set to take effect Friday, that ended the sub-minimum wage rate for restaurant servers who live off tips and requires all workers to receive one hour of paid sick time for every 30 hours worked.
After aggressive lobbying from restaurant workers and the business community, Whitmer and the Democratic Senate, led by Senate Majority Floor Leader Sam Singh (D-East Lansing), agreed to compromise on proposals floated by House Speaker Matt Hall (R-Richland Township)’s caucus. The final versions do the following:
- Increase the tipped wage from 38% to 50% of the minimum wage by 2031.
- Increase the minimum wage to $15 an hour by 2027 with the rate increasing annually based on the rate of inflation.
- Allow employers to frontload an employee’s paid time off, giving small businesses of 10 employees or fewer until Oct. 1 to create a system to track the one hour of paid leave per every 30 hours worked.
- Require small businesses of 10 employees or fewer to provide 40 hours of sick time a year, as opposed to 72 hours for employers of 11 employees or more.
- Give small startup businesses three years to comply with the paid sick time accrual tracking requirement.
- Allows employers to spell out call-in sick procedures in policy to prevent an employee from no-showing for work three days straight without repercussions.
- Excludes overtime, tips and bonuses from the rate employers need to pay their employees who are taking sick days.
- Exempts interns and startup companies from the earned sick leave policy, but that’s about it.
- Allows part-timers to get sick time that is proportional to the hours they work and at the rate full-time employees get sick time.
- The paid sick leave can carry over year after year, but can’t exceed 72 hours for businesses and 40 hours for small businesses.
- Allows for a mechanism in which sick leave is banked with vacation time if companies offer that option.
- Allows an employer to take personnel action against an employee who uses earned sick time if they’re not actually sick.
The changes come after the One Fair Wage (minimum wage) and Time to Care (paid sick leave) succeeded (after failing in 2016) in getting the signatures for a citizens initiative in 2018 to eliminate the tipped wage and create a mandatory sick leave policy. The Republican-led Legislature, concerned the aggressive policy would pass at the ballot box and drive Democratic turnout, adopted the initiatives, but then quickly amended the policies through legislation.
After a prolonged legal ballot, the Michigan Supreme Court ruled last summer the Legislature couldn’t do that.
The Legislature adopted both initiatives, and those initiatives would have taken effect Friday based on the schedule the Justices set.
The decision set off a mad dash by business groups and restaurant workers to urge lawmakers to make some changes to both bills. Waiters wanted to keep their tipped wages on the argument that they made good money under the status quo. They feared making a $15-an-hour base salary would dissuade people from tipping, and they’d be out money.
Businesses looked at the paid sick leave policy as giving too much power to employees to not show up to work and then tilting the legal scales to employees if a dispute went to court.
Any changes to the laws were aggressively challenged by organized labor, who pushed the Democratic majority in the House and Senate to let the law go into effect. However, Wendy Block of the Michigan Chamber of Commerce said too many businesses and wait staff leaned on their legislators to make changes. Their voices couldn’t be ignored.
Democratic lawmakers in both the House and Senate ended up joining nearly every Republican legislator in supporting compromise changes hammered out by Friday’s deadline, primarily behind the scenes by Singh and Hall with the Governor’s blessing.
“The grassroots on this effort saved the day,” Block said. “Businesses from all corners came out of the woodwork and told their legislators, ‘You have to fix this. This sounds great on paper, but in the real world, it doesn’t work for us.’
“The key takeaway here is that the power of the constituent is still very strong.”
Agitated by what they see as a legislative defeat, One Fair Wage announced Thursday it will launch a statewide referendum to hold up the changes in SB 8 until the matter can be put to a vote of the people.
“We’re mobilizing to ensure voters — not politicians — have the ultimate say in whether these protections are upheld,” said Saru Jayaraman, president of One Fair Wage.
To that, Justin Winslow, CEO of the Michigan Restaurant & Lodging Association said, “It is now time for Saru Jayaraman and the astroturf One Fair Wage group to pack up shop and head back to California. Michigan’s restaurant workers did not ask for their help and they do not want it, now or ever.”
Progress Michigan Executive Director Sam Inglot said it’s “disappointing that the Michigan Legislature caved to a spin campaign pushed by corporate lobbyists and voted to roll back a well-deserved raise and paid sick leave for working families in Michigan.
“Hundreds of thousands of Michiganders took action to sign petitions and demand that we give workers a raise, eliminate the sub-minimum tipped wage, and implement paid sick leave in 2018. Advocates fought back against the Republican adopt-and-amend scheme and won, only to face the same betrayal in 2025 – this time in a bipartisan fashion.”
Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter
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