Michigan Supreme Court Announces Significant Change to Minimum Wage Laws

The Michigan Supreme Court’s ruling to increase the state’s minimum wage to $15 per hour by 2028 is reverberating across the state, with both business owners and workers reacting fiercely.

At a Glance

Michigan Supreme Court orders minimum wage increase to $15 by 2028.
The current minimum wage of $10.33 will rise to $12.48 by February 21, 2025.
The tipped wage will be eliminated by 2030.
Concerns rise among business owners over potential financial strain.
Unions and workers celebrate the decision as a victory for fair wages.

Overview of New Minimum Wage Plan

The decision follows a July 31 ruling and outlines a gradual increase in the minimum wage, starting with a raise to $12.48 on February 21, 2025, up from the current $10.33. This will be followed by annual increases culminating in a $15 minimum wage by 2028. For tipped workers, the lower sub-minimum wage will be phased out by 2030.

The decision will also see Michigan’s minimum wage tied to inflation, which requires careful interpretation and implementation as pointed out by the Michigan Department of Treasury. Attorney General Dana Nessel’s office motioned for clarity on this aspect.

Business leaders and restaurant industry officials have expressed concerns about the economic impact of this ruling. Lower minimum wages for tipped workers have been a longstanding practice, and the sudden shift in wage structure could pose challenges.

Economic Impact and Industry Reactions

Business owners argue that the wage hike will result in increased operational costs, potentially leading to reduced hours, job cuts, or even business closures. Marianne Hayoz, owner and operator of The Peppermill Cafe in Grand Rapids, expressed her concerns, stating, “We didn’t ask for this, and we are not out picketing for a higher wage.”

On the other side, labor unions and workers are celebrating the ruling. They argue that a higher minimum wage is essential for ensuring a living wage, particularly as inflation continues to impact household budgets. James Hawk, a restaurant worker from Detroit, commented, “We all deserve a full minimum wage with tips on top.”

“In sum, by adopting the Wage Act and the Earned Sick Time Act and then later stripping those acts of their key features in the same legislative session, the Legislature unconstitutionally violated the people’s initiative rights,” Justice Elizabeth Welch, a Democratic-nominated jurist, wrote in the majority opinion. “Accordingly, we hold that the Amended Wage Act and the Amended Earned Sick Time Act are unconstitutional.”

Minimum Wage Details and Tipped Wage Phase-Out

The phased schedule for minimum wage increases is as follows: $12.48 in 2025, $13.29 in 2026, $14.16 in 2027, and finally $14.97 in 2028, achieving nearly $15 an hour by that year. Alongside, the tipped wages, currently at $3.93 per hour, will incrementally rise to match the standard minimum wage by 2030.

To ensure compliance, employers across Michigan will need to adapt their payment structures and accounting practices to align with the stipulated increments and inflation adjustments. This development places Michigan among states with the highest minimum wages in the U.S., ranked 17th as per current projections.

“Respectfully, the Michigan Department of Treasury has read this Court’s opinion in earnest and believes there exist ambiguities as to how to interpret and implement this Court’s directives in accounting for inflation for the graduated wages for the 2025 through 2028 time period,” commented Attorney General Dana Nessel’s office.

Apart from the wage increase, the ruling revitalizes the Earned Sick Time Act (ESTA) and the Improved Workforce Opportunity Wage Act (Wage Act). The ESTA mandates that nearly all Michigan employers must offer up to 72 hours of sick leave annually. The ruling stipulates one hour of earned sick time for every 30 hours worked, and smaller businesses with fewer than nine employees may limit paid sick time to 40 hours annually.