Michigan’s Tipped Minimum Wage Changes, Explained #DetroitFood

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What the changes to the standard and tipped minimum wages in Michigan mean, and if diners should still tip

Major changes are coming for minimum wage workers in Michigan, including those in the restaurant industry who depend on tips.

After a contentious back and forth that dates back to 2018, Michigan lawmakers in February reached a compromise in the state’s tipped minimum wage saga. But the deal didn’t materialize until the Michigan Supreme Court forced Lansing officials to work together. The bipartisan agreement reached in September reduced the increases stipulated in a bill introduced six years ago, and that’s left progressives fuming.

What does this all mean for the tens of thousands of restaurant and bar workers in Michigan who are paid minimum wage? When will key policies take effect? And what’s next for advocates in Michigan and beyond? Eater Detroit has put together this handy guide to help better understand the changes and the next steps in the struggle over how much workers should be paid.

How did we get here?

In 2018, supporters launched a ballot initiative that asked voters whether to raise Michigan’s standard minimum wage from $10.10 an hour to $13.03 an hour and raise the tipped wage to $11.73 an hour starting in 2025. A second petition focused on sick leave.

The proposal never made it to ballots as conservative lawmakers amended the proposals after adopting the two measures. Years of legal battles followed until July 2024 when the state Supreme Court ruled the moves illegal. In September 2024, in clarifying the gradual elimination of the tipped minimum wage by 2030, the Michigan Supreme Court set the original proposal to become law on Friday, February 21.

Instead, Michigan’s Republican-led legislature, supported by the Michigan Restaurant & Lodging Association, and Democrats came to a compromise that slowed the wage increases. With different business models — for example, counter versus table service, or chain versus independent — restaurants will handle the measure differently.

The move left the progressive lobbying group One Fair Wage and its allies furious.

What is One Fair Wage?

Established in 2019, One Fair Wage is a nationwide grassroots effort that grew out of the worker advocacy group Restaurant Opportunities Center of New York. The phrase began gaining traction as legislation popped up in states before the pandemic with support from progressives including Vermont Sen. Bernie Sanders. One Fair Wage organized in cities across the country and has pressured local lawmakers to take action against the tipped minimum wage, arguing the practice hurt BIPOC workers while pointing toward pay discrepancies. The campaign found success in Chicago, which passed an ordinance in October 2023 to gradually eliminate the tipped minimum wage by 2028.

Lobbying groups, like the Michigan Restaurant & Lodging Association, argued that restaurant owners couldn’t afford to eliminate the tipped minimum wage and that doing so could force restaurants to close. They’ve worked with conservative lawmakers to fight One Fair Wage’s campaign.

What is the standard minimum wage?

The hourly wage in Michigan is currently $12.48 for adults and $10.61 an hour for minors.

On January 1, 2026, wages will increase by $1.25 for adults, or a 10.2 percent raise, for a standard minimum wage, which will rise to $13.73. Wages will increase again to $15 on January 1, 2027. Starting in 2027, the state will adjust those wages in October based on the rate of inflation. If the unemployment rate is more than 8.5 percent the previous year, pay adjustments due to inflation would be made on January 1 of the following year, according to the Detroit News.

What about the tipped minimum wage?

The tipped minimum wage in Michigan is currently $4.74, or 38 percent of the standard minimum. If a worker does not reach the standard minimum wage with tips during any given shift, employers are required to pay the difference or face fines of up to $2,500. However, the tipped minimum wage also allows workers to potentially earn more than the standard hourly minimum if they receive substantial tips. Progressives argue that eliminating the tipped minimum wage allows for more predictable, fair, and equitable pay, regardless of whether a restaurant is experiencing a slow night.

Under the new law, each year on February 21 until 2031, the rate will rise by 2 percent until it reaches 50 percent of the standard minimum wage.

And what about sick leave?

In addition to increases to the minimum wage, progressives have also campaigned to increase sick time. Michiganders will be able to more broadly accrue paid sick time, earning one hour of compensated leave for every 30 hours of work. Effective Wednesday, October 1, employees who work at businesses with 10 or fewer employees can accrue and use at least 40 hours of paid sick time per year. Starting immediately, workers at larger businesses will be able to accrue and use 72 hours of paid leave a year. Employees can now also carry over up to 72 hours of unused paid sick leave into the new year, with smaller firms required to allow up to 40 hours to carry over from one year to the next.

So what’s next?

Organizers from One Fair Wage called February’s decision impacting Michigan’s 400,000 tipped workers an attack on their economic security and a betrayal of the Michigan Supreme Court’s ruling.

Looking ahead, One Fair Wage is seeking to place a statewide referendum on ballots to overturn last month’s legislation by mobilizing hundreds of workers and volunteers across the state to collect signatures and bring the issue to a vote.

How do workers feel about all of this?

Workers whose livelihoods depend on tips have mixed feelings about the fight to phase out the tipped minimum wage. While some say that wage increases for Michigan servers could help them take home more money and reduce restaurant turnover, many others worry that they’ll earn less money.

It feels like I’m constantly hearing about tipping lately. Do I still need to tip?

It can feel sometimes as consumers that we’re constantly being hounded to tip at just about every point of sale, or seeing tips or service fees automatically added to higher-end restaurant bills. In some markets, service fees have been popping up to compensate for any lost tippings. Last year, the U.S. saw a widespread movement to eliminate “junk fees” partially in response to this malaise. It’s leaving customers fatigued.

But the bottom line is, yes, of course, continue to tip. The Michigan tipped minimum wage isn’t being completely eliminated. Keep in mind that tipped workers’ incomes are still contingent on customers, at least customers who value good hospitality and want to see their favorite restaurants survive while navigating a hurricane of inflation and rising labor costs.

from Eater Detroit - All