Michigan Legislators have finalized a deal on tipped wages and sick time, following a late-night negotiation session on Thursday. The agreement comes ahead of significant changes to the state’s minimum wage and paid sick leave policies, which were set to take effect on Friday, February 21, 2025.
The Republican-led House and Democratic-led Senate initially proposed different plans to retain the tipped wage and modify new sick time requirements. They eventually reached a consensus with Senate Bill 8 and House Bill 4002. Both bills were presented to Governor Gretchen Whitmer for signature, although House Bill 4002 was submitted just after the midnight deadline, which might impact its implementation.
Minimum Wage Changes
Without legislative action, the minimum wage would have increased to $12.48 per hour on February 21, 2025, and would have risen to $14.97 by 2028. Additionally, the tipped wage was scheduled to be phased out by 2030. However, Senate Bill 8 modifies these changes by raising the minimum wage to $15 by 2027 and increasing the tipped minimum wage from 38% to 50% of the standard minimum wage by 2031.
Paid Sick Leave Changes
The new sick leave law requires employers with 10 or fewer employees to provide up to 40 hours of paid sick leave, while businesses with more than 10 employees must offer 72 hours. Small businesses have until October 1, 2025, to implement these changes, and new businesses are exempt for three years after hiring their first employee.
Impact and Reaction
The restaurant and hospitality industries have expressed concerns that the original court-ordered changes could lead to significant job losses. However, lawmakers managed to find a middle ground with Senate Bill 8, which passed with bipartisan support.
Key Provisions
Minimum Wage: Increases to $12.48 per hour as of February 21, 2025, reaching $15 by 2027.
Tipped Wage: Remains at 38% of the minimum wage in 2025, increasing to 50% by 2031.
Paid Sick Leave: Small businesses provide 40 hours, larger businesses provide 72 hours.
Implementation: Small businesses have until October 1, 2025, to comply, with new businesses exempt for three years.
The bills are tied together, meaning both must pass for either to take effect. The legislation also includes provisions for employees to use sick time for various health and family needs, including domestic violence support and public health emergencies.
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