Michigan Supreme Court ruling will result in big minimum wage hike next year

LANSING, Michigan — The Michigan Supreme Court ruled Wednesday that Republican lawmakers unconstitutionally blocked two ballot proposals in 2018, reaching a decision that will increase the minimum wage, enact a new paid sick leave standard for workers and have significant economic repercussions across the state.

In the 4-3 ruling, Michigan's high court said the Legislature acted inappropriately when it approved two petition-backed initiatives before Election Day in 2018, so they wouldn't go on the ballot, and then, returned later in the year to significantly weaken the policies.

"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 wrote in the majority opinion Wednesday. "Accordingly, we hold that the Amended Wage Act and the Amended Earned Sick Time Act are unconstitutional."

The Supreme Court determined the original minimum wage and paid leave proposals should go into effect on Feb. 21, 2025, 205 days after the decision, mirroring the delay before implementation that would have occurred in 2018. The citizen-initiated proposals established phased-in increases in the minimum wage, along with initially setting it at $10 an hour.

Under the ruling, Michigan's current $10.33-an-hour minimum wage will increase by at least $2 an hour on Feb. 21, 2025, because the justices added an inflationary adjustment, which will be calculated by the state treasurer, to the $10 rate. The new minimum wage will likely be somewhere around $12.50 an hour.

It will continue to increase in the three years following 2025 and then be tied to inflation going forward. Likewise, the tipped minimum wage will go to 48% of the traditional minimum wage, likely around $6 an hour. It's currently $3.93 an hour.

Under the initiative and the court ruling, the tipped minimum wage will gradually move to 100% of the regular minimum wage over five years following 2025. Originally, that transition was supposed to happen from 2019 to 2024.

Saru Jayaraman, president of One Fair Wage, touted the Supreme Court's decision.

"This is a great day for the more than 494,000 workers in Michigan who are getting a raise," Jayaraman said. "We have finally prevailed over the corporate interests who tried everything they could to prevent all workers, including restaurant workers, from being paid a full, fair wage with tips on top."

'Difficult to imagine'

The three other Democratic-nominated justices, Richard Bernstein, Kyra Bolden and Megan Cavanagh, joined in Welch's majority opinion.

The three Republican-nominated justices, Elizabeth Clement, David Viviano and Brian Zahra, dissented.

The Supreme Court majority was adopting "as the employment law of this state statutory language that was neither approved by the Legislature nor voted on by the people," Zahra wrote in his dissenting opinion.

"The chosen remedy expressed in the majority opinion and the court’s choice to exercise legislative power by rewriting statutory language find no support in the Michigan Constitution, or in the history, tradition or case law of this state or this country," Zahra wrote.

Wendy Block, senior vice president of business advocacy for the Michigan Chamber of Commerce, said the ramifications of the court decision "will be deep and felt by job providers and workers alike."

"It’s difficult to imagine how our state’s restaurants and hospitality establishments will absorb this large of an increase in their labor costs or how employers will make the required sweeping and costly changes to their leave policies without drastically cutting back elsewhere," Block said Wednesday.

Under the sick-leave policy, Michigan businesses would broadly be required to provide earned sick time to each of their employees at the rate of one hour of paid sick time for every 30 hours worked. Employees could use the sick time for mental or physical illness, medical care or for meetings at their child’s school about the child’s health.

Employees of a small business — those with fewer than nine employees in a given week — could not use more than 40 hours of paid sick time in a year unless allowed to use more by their employer.

'Unprecedented' act

Justices heard arguments in December on the constitutionality of a controversial legislative maneuver in 2018 known as "adopt and amend" that sought to curb implementation of the proposed minimum wage hike and paid sick leave standard.

The strategy delayed and decreased minimum wage increases, kept the tipped wage where proponents sought to replace it with the minimum wage and stopped paid sick leave from applying to small businesses.

Past GOP legislative leaders have maintained their maneuver was protected by the Constitution, but opponents said lawmakers “usurped” the rights of voters to initiate law at the ballot box. If voters had approved the proposals themselves at the ballot box, it would have required super majorities in the Legislature, which Republicans didn't have, to amend them.

Then-Senate Majority Leader Arlan Meekhof, R-West Olive, told reporters in 2018 that business owners and other citizens urged changes to the proposals to "make sure Michigan continues on its economic progress."

"The voters know when they sign a petition that it comes before the Legislature before anything happens to it," Meekhof said at the time.

In a footnote in her decision, Welch called the Legislature's maneuver "an unprecedented and unconstitutional act."

"Fashioning an appropriate remedy in response to an unprecedented and unconstitutional legislative act is not necessarily easy," Welch wrote. "Nevertheless, resolving disputes by fashioning appropriate remedies is what courts are tasked with doing—even in difficult cases."

Welch wrote that lawmakers in 2018 should have had only three options: let the proposals go to the ballot; adopt the proposals; or submit alternatives for voters to consider alongside the proposals.

Clement disagreed, saying the Legislature "must have the authority to amend a previously enacted law proposed in an initiative petition."

"The issue is that there is no language in the relevant constitutional provisions limiting the Legislature’s inherent authority to do so at certain times, contrary to the majority’s conclusion," Clement wrote.

Petition drives

The nearly six-year battle over the minimum wage and paid sick leave proposals dated back to 2018 ballot initiatives led by Michigan One Fair Wage and Michigan Time to Care.

Michigan One Fair Wage's initiative would have increased the minimum wage to $12 an hour by 2022 from the $9.25 rate in place in 2018, then tie future increases to inflation. The initiative also would have gradually eliminated the lower minimum wage given to restaurant workers who make tips — called the tipped wage — and replace it with the minimum wage.

Michigan Time to Care's initiative would have required most employers to provide paid sick time to their workers.

The ballot committees collected the signatures they needed for the initiatives to make the 2018 ballot, but the then Republican-led Legislature intervened to keep the measures of the ballot.

The changes the Legislature implemented extended the implementation of the minimum wage increase, so it wouldn't reach $12.05 until 2030, removed the link to inflation and kept the tipped wage in place. Lawmakers also exempted small businesses, which employ more than 1 million workers in Michigan, from the paid sick leave requirements.

Current Senate Minority Leader Aric Nesbitt, R-Porter Township, labeled the Supreme Court's ruling "misguided."

"The Legislature needs to act now to prevent catastrophic damage to the livelihoods of the workers at restaurants and bars throughout our state that barely survived the mandated COVID lockdowns and are still facing increased costs due to inflation," Nesbitt said.

Senate Majority Leader Winnie Brinks, D-Grand Rapids, said her legal team was reviewing the decision.

“Here’s what I know to be true: the Legislature has a responsibility to uphold the will of the people," Brinks said. "Additionally, the people of Michigan deserve clarity. The then-Republican majority made a deceitful bait-and-switch on the very people they were sworn to serve, and this lengthy battle was caused by their tactics."