On August 22, 2024, the Michigan Department of Labor & Economic Opportunity (LEO) issued a press release on the heels of the Mothering Justice decision, about which we previously wrote, and which will drastically change the minimum wage, tip credit, and paid sick leave obligations for Michigan employers.

With respect to paid sick leave, LEO announced that it issued new guidance and FAQs on the Earned Sick Time Act, which goes into effect on February 21, 2025. We will be publishing an Insight shortly detailing all the mandatory changes.

With respect to the minimum wage and tip credit changes, on August 21, the state of Michigan’s Attorney General, LEO, and the Department of Treasury asked the Michigan Supreme Court for clarification on how the Treasurer should calculate adjustments for inflation to set new minimum wage rates, as directed by the July 31 decision. The motion outlines a proposed schedule of new minimum wages based on one interpretation of the Supreme Court’s order, but suggests that ambiguity in the order leaves room for interpretation and therefore lays out five options:

Option 1         Bring the statutory minimum wages in Section 4(1) current to July 31, 2024, through an inflationary catch-up beginning January 1, 2019 (the Treasury’s intended approach)

Option 2         Look back 12-months before July 31, 2024, consistent with the 12-month provision in Section 4(2)

Option 3         Strictly apply Section 4(2) assuming a year-over-year inflation analysis beginning in September 2021

Option 4         Strictly apply Section 4(2) assuming a 12-month averaging analysis

Option 5         Apply a rolling start year for each of the years and enumerated wages set forth in the Wage Act, Section 4(1)a–d, while maintaining a July 31, 2024 end date

The State’s motion also suggests that (a) February 21, 2025 should not be the new effective date, since the Wage Act had contemplated changes every year on New Year’s Day;  (b) the court meant to say “baseline minimum wage” when it used the phrase “tip credit”; and (c) the court was wrong to adjust the “tip credit” proportion to 100% where the Act had it at 90% .  

Michigan has asked the Supreme Court to expedite a ruling on its motion, requesting a response by September 15, mindful of the directive that new minimum wage rates be determined by November. We will report again once the Supreme Court has ruled on this motion.

Elizabeth A. Ledkovsky, Staff Attorney for EBG’s Employment, Labor & Workforce Management practice, contributed to the preparation of this post.