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Impending changes to state labor laws are set to devastate Michigan’s economy. Last July, the Michigan Supreme Court’s ruling in Mothering Justice v. Attorney General effectively enacted a paid sick leave mandate, dramatically raised the minimum wage, and eliminated the tipped wage credit for restaurant workers.
The new laws are set to kick in Feb. 21, though legislators were debating a fix even as this publication went to print. News of the changes have shocked employers and workers, creating uncertainty that will raise costs for businesses, eliminate jobs, worsen customer service, increase consumer prices and force companies to close.
In 2018 the Legislature adopted and then amended a ballot measure to create the new laws. A six-year legal battle followed. The state’s highest court ended the dispute by ruling that the Legislature’s move was unconstitutional. The court ordered the laws to take effect years after they were first scheduled.
The laws require businesses to provide up to 72 hours of paid sick leave (nine days) annually for each employee. There are no exemptions for small businesses or nonprofits, which cannot absorb such costs with ease. The “no call, no show” policy in the law prevents employers from requesting proof of an employee’s whereabouts or sickness until after three days. It also ties the hands of employers by presuming employees have been wrongfully terminated in cases where an employer lets go of an employee who may have abused the new regulations.
A dramatic minimum wage hike, to $12.48 per hour from $10.33 per hour, also starts in late February. The minimum wage is scheduled to reach nearly $15 per hour in 2028. For tipped employees, the tip credit would phase out by 2030. Eliminating the tipped wage credit has panicked servers statewide, who believe their tips will drop now that customers know they are making a higher wage. Even worse, the increase in labor costs — more than 200% — would break the bank for restaurateurs who already operate on tight margins, causing dramatically higher menu prices, restaurant closures, and an estimated 60,000 layoffs.
The Michigan House of Representatives has passed reforms that will blunt the economic damage of these laws by exempting small businesses from the paid leave mandates, making it easier to prevent sick time abuse and restoring the tipped wage. Labor unions and progressive advocacy groups are pressing the Democratic-led Senate to keep the laws as they are.
As the clock ticks, the Mackinac Center has launched a media and citizen education campaign to pressure the Senate to act before businesses close, jobs disappear and consumer prices jump.
