Whitmer: Delay Michigan wage, paid leave laws if no deal on changes

• Gov. Gretchen Whitmer proposes delaying new paid sick leave, wage laws unless lawmakers agree on changes this week
• The laws, set to take effect Feb. 21, would raise the minimum wage, phase out a “tipped credit” and mandate paid sick leave
• The Republican-led House, which passed its own plan last month, is floating a potential compromise with Democratic-led Senate

LANSING — Michigan Gov. Gretchen Whitmer is asking lawmakers to temporarily delay pending minimum wage and sick leave laws if they are unable to reach a compromise on potential changes this week. 

Suspending the laws until July 1 would give Republican House Speaker Matt Hall and Democratic Senate Majority Leader Winnie Brinks “more space … to continue negotiations while we work on the budget,” Whitmer spokesperson Stacey LaRouche said in a statement. 

Whitmer called both leaders Wednesday to propose the extension, she said.

“The administration has heard concerns about implementation of the new law,” LaRouche said, “and the governor has made it clear that she is open to a bipartisan deal that protects servers and wait staff, while also providing certainty to small businesses and helping Michigan remain competitive.”

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At issue are big changes to Michigan minimum wage and sick leave laws that were proposed in a 2018 petition drive, quickly weakened that same year by the Legislature but recently reinstated by the Michigan Supreme Court. They’re set to take effect Feb. 21. 

Among other things, the laws are poised to raise Michigan’s $10.56 an hour minimum wage to nearly $15 an hour by 2028 and mandate all employers give workers between five and nine paid sick days a year. 

The state’s current $4.01 an hour base wage for tipped employees would rise as well until matching the standard minimum wage by the end of the decade.

Employers in the business and hospitality sector have warned the changes could have a severe impact on various industries across Michigan, though some believe those fears are overblown.

It’s been nearly 200 days since the Michigan Supreme Court handed down the order to change state sick leave and minimum wage laws. Democrats did not attempt to alter the laws in 2024, but Republicans who took control of the state House made it their first order of business in the new term.

Senate Democrats have since rolled out their own four-bill package on the subject. As a result, Democrats and Republicans are pitching dueling plans. 

Each would ultimately raise Michigan’s minimum wage to $15 an hour within the next few years, but the proposals differ significantly on proposed sick leave and tipped credit rules. 

Room to negotiate?  

Whitmer's suggestion that lawmakers delay implementation of the laws until July if they can’t reach a deal comes as the House and Senate consider separate reforms but have not yet reached a compromise. 

House Republicans, who last month passed legislation that would exempt small businesses with fewer than 50 or fewer employees from the leave rules and retain the tipped credit, on Wednesday floated a potential deal to Senate Democrats. Under the proposal:

• Employers with between 1 and 10 workers, seasonal workers and nonprofit workers would be exempt from the paid sick leave law
• Employers with between 11 and 50 workers would have to offer at least 40 hours of paid sick leave, or five days.
• Employers with more than 50 workers would need to offer 72 hours of paid sick leave, or nine days. But if an organization offers more than what’s legally required, employers would be able to stick with how they currently operate.
• Employees would still be allowed to carry over 72 hours of paid sick leave, with the law providing employees earn one hour of paid sick leave for every 30 hours worked
• The state would retain the tipped credit, but increase base pay for restaurant workers to 50% of the regular minimum wage, up from the current 38% but lower than the 60% proposed by Senate Democrats. 

It’s “well past time for Senate Democrats to meet us halfway … and solve this crisis before next week’s deadline,” Hall, the House Speaker and Richland Township Republican, said in a Wednesday afternoon statement. 

“I am committed to finding the right solution to the tip credit and earned sick time crisis that protects both Michigan’s working families and our local small businesses,” Hall added. “I have come to the table in good faith, trying to meet Senate Democrats halfway, because I believe we can achieve a balanced approach that helps hardworking Michiganders without forcing a big part of our small business community to close their doors for good.”

Senate Democrats’ current plan would raise Michigan’s minimum wage to $15 an hour by 2027 and bring the state’s tipped wage to 60% of the current minimum wage by 2035.

Those proposed changes were the focus of yet another Senate hearing Wednesday, packed with testimony from business leaders, restaurateurs, employees, unions and more. 

“Two out of five restaurants are on the edge of closure,” in Michigan currently, said Justin Winslow, president and CEO of the Michigan Restaurant and Lodging Association. “That's not sustainable. This is the kind of policy that would push them over the edge.”

Biggest among tipped wage workers’ concerns is whether they will continue to make tips at all, which typically drive their take-home pay well above a minimum wage level.

But the pending law to phase out a "tipped credit" for restaurant workers is unlikely to end customer tips those workers rely on, said Sean Egan with the Michigan Department of Labor and Economic Opportunity (LEO).

Seven states have already eliminated their tipped credit, Egan said during testimony Wednesday, and tipping has continued at or near the national average of 19.5% of customer bills.

"Tipping behavior seems to stay around that line" regardless of state wage laws for restaurant workers, he said, citing data from the US Department of Labor and credit card service provider Toast.

Tipping rates were lowest in California, which has no tipped credit, at 17.4%, Egan acknowledged. But with a $16 minimum wage, restaurant workers there are guaranteed the highest base pay in the country, he said. 

The Senate committee advanced paid sick leave legislation on Wednesday, but sponsoring Sen. Sam Singh, D-East Lansing, said additional changes are coming to make it "more efficient' and employer-friendly.

The panel is expected to consider minimum wage legislation on Thursday.