Michigan businesses await court of appeals ruling on minimum wage for tipped workers

MICHIGAN (WLUC) – Minimum wage in Michigan could be raised to $12 an hour for all hourly employees on Feb. 19 should a Dec. 13 court of appeals hearing uphold a July ruling.

That ruling reversed an amendment that republican legislators made to a 2018 ballot initiative right after passing it. The original initiative was proposed by One Fair Wage and called for an increase in the minimum wage and an elimination of the state’s tipped wage credit.

“Originally, we proposed it by having the minimum wage steadily raise to $12 an hour. And to ensure that cost of living is also tied to it moving forward,” said Maricela Gutierrez, One Fair Wage co-organizing director.

Republicans passed it, then amended it to save the tip credit. The credit allows businesses to pay tipped employees as low as 38% of the minimum wage if their tips and hourly pay meet the income threshold. But a Michigan court of claims judge ruled against the amendment, restoring the original proposal.

“They couldn’t amend the legislation as they did and now that court of claims decision is left to stand with the tipped wages. The restaurant industry is really concerned about how abruptly that rise would occur,” said Marty Fittante, InvestUP CEO.

Fittante said he fears eliminating the tipped wage credit and increasing the wage at the same time could negatively affect U.P. businesses.

“We’re coming out of COVID and where we stand with inflation, it’s a challenge right now for these particular businesses and restaurants to navigate this already. Adding another burden, one that is expensive, I think it’s really concerning,” Fittante said.

Justin Winslow, Michigan Restaurant and Lodging Association president said he thinks customers will have less incentive to tip servers without the tip credit in place. He thinks many tipped employees do well now with tips they receive.

“In Michigan, it seems like $25 is the norm that servers are making which is dramatically higher than the minimum wage with the current system,” Winslow said. “Which is why a lot of them frankly prefer the status quo and don’t want to see this change.”

Meanwhile, Gutierrez said it will benefit both workers and businesses.

“It’ll signal to workers that they should come back. Right now, there has been a mass exodus of restaurant workers leaving because they’ve decided they work too many hours and are not paid enough. In addition, it also gives employees more autonomy to people, so they aren’t taking as much abuse that does happen in the restaurant industry,” Gutierrez said

On Dec. 13, business owners will find out how much of a raise in wage they’ll be adjusting for, and how quickly.

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