Tip Credit Proposal

As reported last week in Crain’s Detroit Business, a pair of state legislators have sponsored a bill that would modify pending changes in Michigan’s minimum wage law. In July, the Michigan Supreme Court ruled that the legislature had improperly amended a 2018 ballot measure intended to increase the state’s minimum wage and eliminate the earned tip credit. Consequently, that measure will become law on February 21, 2025, unless the legislature revisits it before that date.

Republican Graham Filler and Democrat Nate Shannon co-sponsored this week’s bill. Crain’s quoted Filler: “If lawmakers do nothing, it’s going to blow up the restaurant industry, small businesses, and the business atmosphere in Michigan in general.” The proposed bill seeks to slow the pace of increases in the minimum wage and to retain the tip credit, which allows restaurants to pay servers a minimum wage equal to 38% of the stated minimum wage so long as tips push total compensation at or above the minimum. Restaurants welcome the proposal to restore the tip credit. Organized labor opposes it, but many industry workers prefer the current system and maintenance of the tip credit.

Filler also sponsored a companion bill that seeks to modify the pending Earned Sick Time Act, which is also slated to kick-in February 21 per the same Supreme Court decision. Without a democratic co-sponsor, the second bill may have a harder time getting through both chambers of the legislature.