Some Michigan Democratic lawmakers wary of looming minimum wage hike, sick time benefit
Published in Business News
LANSING, Mich. — Restaurants and businesses are pressing the Democratic-led Legislature for a compromise after the Michigan Supreme Court ruled last month that past legislative efforts to scale back a 2018 minimum wage and paid sick leave law were unconstitutional.
The ruling means, starting in late February, Michigan's minimum hourly wage will increase by an estimated $2, or 16%, to about $12.50, then continue to increase through 2028 to about $15, after which time it will be tied to inflation.
The ruling also allows for the gradual elimination of the tipped wage — a lower minimum wage of $3.93 an hour for restaurant workers who are paid tips — to be replaced by the regular hourly minimum wage. The tipped wage rate could jump to about $6 an hour next year, a 53% increase in hourly payroll for businesses with tipped workers.
The proposal allows for the accrual of up to 72 hours of paid sick leave for any worker across the state. Prior to the high court's July 31 decision, the paid sick leave component was scaled back and limited to businesses with more than 50 workers.
The Michigan Restaurant and Lodging Association, one of the more active stakeholders in the debate, said it is pushing for a compromise this fall that would expedite the implementation of the minimum wage increases in return for retaining the tipped wage. Other small business groups are pushing for changes to the regulatory structure of the paid sick leave law to allow smaller companies more flexibility in implementation, and hoping those changes would be moved through as a package with any minimum wage deal.
Justin Winslow, president and CEO of the restaurant and lodging group, said there is bipartisan participation and buy-in in the minimum wage discussions.
“There’s a pathway to get to a higher wage faster while still keeping the tipped wage, a plan that we would consider a win-win,” said Winslow, adding that legislation is in the “drafting stage.”
Democratic House and Senate leaders are mum on the matter, except to say discussions are ongoing. Democratic Gov. Gretchen Whitmer's office said it has been "reviewing" the Supreme Court's decision since July 31 and has offered no further comment.
Other Democratic lawmakers, while condemning the “adopt and amend” strategy used by their Republican predecessors, have been more vocal about the need to consider the economic implications for businesses, as well as employees.
“The economy has changed quite a bit since this occurred — it was about six years ago — and businesses in Michigan are suffering from a lot of different pressures,” said state Sen. Kevin Hertel, D-St. Clair Shores. “We need to make sure we take that into account and work with all sides to do what’s best.”
But the groups that helped pass the proposal and a workers' unions are warning against any changes after winning a historic victory in the Michigan Supreme Court.
“If anyone is having active discussions about weakening minimum wage increases and earned paid sick leave, they have not bothered to talk to us,” Michigan AFL-CIO President Ron Bieber said. “Watering down the court’s ruling would be a slap in the face to Michigan workers who were already robbed once back in 2018.”
The window to make those changes, should state lawmakers choose to, is limited. Lawmakers will be in session for just a few days ahead of the November election, leaving the question for either the Legislature's post-Thanksgiving lame-duck session or the first few weeks of the next legislative session.
Supreme Court ruling
The July 31 opinion of the Michigan Supreme Court addressed the 2018 Republican-led Legislature’s controversial “adopt and amend” strategy. The legislative maneuver sought to curb the implementation of a proposed minimum wage hike and paid sick leave initiative by adopting the citizen-initiated law before it could go to the ballot, then waiting until after the election to amend it.
The Legislature’s amendments, which were signed by then-Republican Gov. Rick Snyder, stunted the minimum wage increase, froze the tipped wage and stopped paid sick leave laws from applying to small businesses.
But the Supreme Court, in a 4-3 majority decision last month, said the maneuver was “unprecedented and unconstitutional” because the Legislature cannot both adopt and amend an initiative within the same session.
The decision, which brought an end to a six-year legal battle, was lauded by workers’ groups, but set off a flurry of concern among business and restaurant groups that are required to comply with the decision starting Feb. 21.
Restaurants and some servers have pushed to retain the tipped wage, arguing they make more than the minimum wage when tips are included. If customers knew they were making minimum wage, some servers have argued, they'd pull back on tips. And small businesses say the stricter paid sick leave requirements remove paid time off flexibility and put onerous mandates on small business without the human resources capacity to handle them.
Business groups said the need for a solution is urgent, but they were sober about the prospect of reaching a compromise before the Nov. 5 general election.
"The reality is that politics are going to be connected to this issue in the short-term," said Wendy Block, senior vice president of business advocacy for the Michigan Chamber of Commerce.
"But we are not asking the Legislature to return to the 2018 adopted version. We think there’s something to be found in the middle.”
Proposed changes
While specifics are still lacking, Winslow is hopeful the Legislature will be open to a compromise that blunts the impact on businesses.
The plan in the works would expedite the implementation of the minimum wage increase in exchange for the retention of the tipped wage in some form. Some stakeholders say the expedited implementation would be a wash since the tight labor market has demanded higher than minimum wage in many businesses.
The state chapter of the National Federation of Independent Business (NFIB) and the Small Business Association of Michigan (SBAM), for their part, have been largely focusing their efforts on problematic portions of the paid sick leave law.
“We’re trying to interpret and then triage our concerns,” said SBAM CEO Brian Calley, who was lieutenant governor under Snyder when the Legislature carried out the adopt-and-amend maneuver. “There’s a very long list of concerns, both administratively and just practically, and the difficulty of managing through the change in the requirements is significant.”
Some of those regulations causing concerns are rules surrounding employers seeking notice or documentation from an employee taking sick time and the resulting challenge of addressing abuses of the system, said Amanda Fisher, state director for the NFIB.
“There seems to be some agreement that some of these issues need to be addressed,” Fisher said. “But there are a lot of moving parts in getting this legislation done.”
Calley also noted that the law allows for employees to take small increments of sick time, allowing an employee, in theory, to show up late for work repeatedly so long as he or she has sick time accrued to cover it.
“A person can be a half hour late to work 144 times per year and the business would be disallowed, would be barred on an absolute basis from any sort of verification or corrective action,” Calley said.
The law requires an employee to provide up to seven days' advance notice for "foreseeable" instances where they'll need a sick day; where it is not foreseeable, the employee would need to give notice "as soon as is practicable." An employer could ask for reasonable documentation if an employee is out three days in a row.
Additionally, employers are uncertain whether they're able to frontload paid sick leave under the law, or if they'll be required to keep close records of hours to generate the accrual throughout the year. The law creates a burden — especially on small businesses without a human resources department — to keep strict and accurate records should a dispute over those hours arise, where there would be a rebuttable presumption that the employer is in the wrong, Calley said.
The new law also makes the use of a general leave or PTO bank difficult since the rules of paid sick leave — looser notice requirements, in particular — have to be applied to all hours in the general leave bank, even vacation, where employers traditionally would need more advanced notification or approval, Calley and Fisher said. So employers may need to separate out sick days from vacation days, but that would remove the flexibility that an employee would otherwise have to use a PTO bank for either.
Those are just some of the concerns cropping up as employers get a full understanding of a portion of the 2018 laws that has been overlooked because of its complexity and the looming presence of the minimum wage question, Calley said.
“The most common reaction I’m hearing is, ‘I need to put everything on hold right now until we know how this is going to land,’” Calley said of business owners.
Will the Legislature act?
Republican calls for the Legislature to act in the wake of the Supreme Court decision were swift, but Democrats, with the exceptions of a few, were generally more measured.
Sen. Mallory McMorrow, who helped collect signatures for the proposal before running for office, said she’s been supportive of the initiative from the start but acknowledged businesses needed time to absorb the changes.
“My belief is we should implement the language as closely as possible and really work on, 'How do we support our business owners in being able to get to the intention of the proposal?'” the Royal Oak Democrat said.
McMorrow noted lawmakers are still reviewing the decision and trying to understand how much of the implementation can be done through administrative rulemaking and how much needed legislative involvement.
Spokesmen for the state departments of Treasury and Labor and Economic Opportunity, which are expected to issue guidance on the new laws, said Friday officials still are reviewing the decision.
Hertel said he’s heard from workers who like the tipped wage, and he’s concerned about the lack of flexibility in some of the paid sick leave regulations. The Macomb County Democrat said any consideration of changes to the law would need to be guided by a set of core values: access to paid sick leave and a fair wage for all workers.
“I think we can do all that while making sure everyone has a voice at the table,” Hertel said.
State Rep. Noah Arbit, D-West Bloomfield, argued the elimination of the tipped wage could lead to “thousands of servers” being laid off and restaurants going out of business.
Arbit agreed with the Supreme Court’s condemnation of the “adopt and amend” strategy and said he was committed to a fair, livable wage but didn’t want “to pull the rug out” from restaurants and consumers.
“I don’t think there’s necessarily a predetermined outcome, but I hope that negotiations over any changes will involve all interested parties,” Arbit said.
State Rep. Betsy Coffia, D-Traverse City, said the issue is important to northern Michigan's tourism and hospitality businesses that are trying to fully understand the implications of the new wage hikes and sick leave benefits.
"I am very actively reaching out to and am in conversations with small business owners and workers as we’re all trying to wrap our heads around a very complicated situation," Coffia said. "I know it's very important to our region.”
Rep. Carrie Rheingans, D-Ann Arbor, said any discussion about potential changes will take time and should not be rushed.
"If we want to be really thoughtful about this, we'd have to do something next term," Rheingans said.
Sen. Erika Geiss, D-Taylor, was less receptive to the idea of changing the law during a press call last month with Mothering Justice, an advocacy group whose lawsuit over the adopt-and-amend scheme resulted in the July 31 Michigan Supreme Court decision.
"I would be very disappointed if my colleagues try to somehow dilute it because I think that the people were very clear in what they wanted to see happen," Geiss said. "Obviously, we haven't had those conversations yet in the Legislature but I would hope that we would uphold what was supposed to happen in 2018."
Stakeholders that pushed for the changes echoed Geiss' concerns.
"We would reject any effort to obstruct, to slow down, to divide workers or to otherwise undermine this victory from workers," said Justin Onwenu, state director for One Fair Wage, a group that helped to pass the initiative.
After six years of political and legal battles, "it is time for it to be enacted and to go into effect," Danielle Atkinson, executive director for Mothering Justice, told reporters last month.
"If the Legislature decides to step in and slow down the process, they are going against the will of the people," Atkinson said.
_____
(Staff Writer Craig Mauger contributed.)
_____
©2024 www.detroitnews.com. Visit at detroitnews.com. Distributed by Tribune Content Agency, LLC.