Michigan Senate passes compromise legislation on tipped wages
Michigan Senate passes compromise legislation to avert a court-ordered change to the state's minimum wage law. Feb. 13, 2025. Screenshot
As sweeping changes to Michigan's minimum wage and earned sick time standards, which pose concerns in the restaurant industry, are set to take effect next week, the state Senate found a compromise on Thursday to preserve tipped wages.
It's one piece to the puzzle, but after days of testimony and frequent rallies at the Capitol Building by members of the service industry asking lawmakers to intercede, supporters of the Senate's tipped wage compromise say coming to an agreement in Michigan's politically divided legislature is vital to save restaurants across the state.
'I've heard loud and clear from the people across my district, whether they are small business owners, whether they are waitresses, waiters, bartenders, that this was going to impact them in a negative way, and they wanted something to change here,' Sen. Kevin Hertel (D-St. Clair Shores) told media after session, addressing the changes to Michigan's law to take effect on Feb. 21 unless the legislature finishes a deal.
After the state legislature in 2018 adopted provisions in ballot efforts that would've raised minimum wage to $15, phased out sub-minimum tipped wages and set standards for required sick leave for employees, they watered them down after the election in a move the state Supreme Court deemed unconstitutional last summer. The court's decision mandated that the changes in the ballot efforts be implemented, but lawmakers have the opportunity to pass different policies, allowing hours of testimony to get insights from business owners and employees in Michigan.
Republicans in both chambers have been vocal in their support of maintaining Michigan's tipped wage offered to servers and bartenders, set at 38% of minimum wage, which hundreds of service industry professionals have rallied at the Capitol to support as many say they make far more with the current tipping system than they would at minimum wage.
After Senate Democrats had proposed gradually raising tipped wages to 60% whereas House Republicans favored maintaining 38% of minimum wage, lawmakers met in the middle with Senate Bill 8, which raises tipped wages to 50% by 2031.
It passed 20-12, with five Senators excused.
It's not a comfortable compromise, Senate Minority Leader Aric Nesbitt (R-Porter Township) told media after the vote on the legislation, but it was one that he said Republicans carried to the finish line as Democrats, who hold the majority in Senate only supplied 8 of the yes votes, while 12 Republicans gave the bill their support.
'Senate Republicans took the lead, and we're going to continue to protect hard working small business owners,' Nesbitt said. 'Today we're saying 'small business owners, Senate Republicans are going to have your back. Hard working folks in the hospitality industry, Senate Republicans have your back'.'
The eight Democrats who voted for the bill included Hertel, as well as Senate Majority Leader Winnie Brinks (D-Grand Rapids), and Sens. Sam Singh (D-East Lansing), Veronica Kleinfelt (D-Eastpointe), Jeremy Moss (D-Southfield), Dayna Polehanki (D-Livonia), Sue Shink (D-Northfield Twp.), and Paul Wojno (D-Warren).
Senate Bill 8, which also allows minimum wage to reach $15 by 2027, two years faster than the plan the Republican-led House has passed, presents the clearest path to passage with House Speaker Matt Hall (R-Richland Township) applauding the Senate's actions Thursday.
'Tonight's vote is a step in the right direction, but Michigan workers can't afford more delays,' Hall said in a news release Thursday. 'I put forward a sick time benefits plan that works for everyone — now it's time for Senate Democrats to do their part. The deal is on the table, and we can get this done now.'
However, not everyone was happy with the deal. Saru Jayaraman, President of One Fair Wage, called the bill a deliberate effort to strip money from the pockets of Michigan's lowest-paid workers.
'This is a blatant PAY CUT and betrayal of working people, and Michigan workers will remember exactly who stood with them and who sold them out and cut their wages. After an election cycle where workers made it abundantly clear that politicians must stand with them, we applaud the majority of Senate Democrats who listened to working people, and condemn the eight Senate Democrats who still chose to side with Republicans and corporate lobbyists to strip wages from the lowest-paid people in this state,' said Jayaraman. 'What does it even mean to be a Democrat if you vote to gut a minimum wage increase that was won in the courts and was just days away from taking effect? These senators have made their choice—now they will have to answer for it.'
Changes to minimum and tipped wages will still have to get both chambers' approval and lawmakers are still in negotiations on sick time policies.
The House's plan would exempt businesses with less than 50 employees from the sick leave law, while the Senate's plan would place different requirements for sick leave for businesses with fewer than 25 individuals than for businesses with 25 or more employees.
Both Nesbitt and Hertel told media members that the bipartisan nature of the minimum wage compromise bodes well for coming to an agreement next week on sick leave, but it will take a lot of conversations and work to cross the steep partisan divides in Lansing for the common good.
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