Michigan minimum wage slated to increase to $12.48 an hour next year after court ruling

A follow-up ruling from the Michigan Supreme Court published Wednesday gives workers, employers and state officials a better picture of what the state's minimum wage will be next year, although exact figures don't have to be finalized until Nov. 1.

After the court’s clarifying order was published, the hourly minimum wage in Michigan is poised to be $12.48 an hour beginning Feb. 21, 2025. It will increase on Feb. 21 each year after, rising to $13.29 in 2026, $14.16 in 2027 and $14.97 in 2028.

The state’s tipped minimum wage, the lower hourly pay given to workers expected to make the bulk of their earnings through tips, will also increase yearly before being completely phased out in 2030.

Why is minimum wage changing in Michigan?

In 2024, the minimum wage in Michigan is $10.33 an hour. But that’s set to increase by more than $2 next February after the Michigan Supreme Court's ruling.

In July, the high court wiped out Michigan’s existing minimum wage laws, ruling they were set improperly, and established a new scale to gradually increase the state’s minimum wage each year. The court heard a case concerning the state’s minimum wage laws, as well as its paid sick leave policies, after organizers behind a pair of petition initiatives sued the Legislature for adopting the petition language but amending it to reduce increases to minimum wage and paid sick time in 2018.

The court sided with organizers and ordered the state treasurer to install a minimum wage of $10, plus an adjustment for inflation up until July 31, 2024, per hour. But in a subsequent court filing, Attorney General Dana Nessel’s office said the court didn’t clearly establish a starting point from which to calculate inflation.

The filing, made on behalf of state Treasurer Rachael Eubanks’ office, presented five different options for calculating inflation, including a preferred option to establish Jan. 1, 2019, as the starting point.

The high court agreed on Wednesday, issuing a ruling setting Jan. 1, 2019, as the starting point to calculate inflation. The state, in its filing seeking clarity, had calculated inflation as being close to 24.8% from January 2019 to July 2024, setting the minimum wage at $12.48. The court ordered Eubanks to finalize the minimum wage by Nov. 1.

Could there be another twist to Michigan’s minimum wage law?

Perhaps the part of the Supreme Court’s ruling that has garnered the most attention is the eventual elimination of the tipped minimum wage in Michigan.

Some tipped workers, like restaurant servers and bartenders, worry they’ll take home less pay if they earn a standard minimum wage. Hundreds of them rallied Wednesday in Lansing, calling on lawmakers to pass legislation maintaining Michigan’s current tip credit system. Interest groups for the hospitality industry and small businesses advocacy groups are also urging lawmakers to address the pending changes to the state’s minimum wage laws.

The tipped minimum wage in Michigan is currently $3.93 per hour, 38% of the standard minimum wage.

Since the court’s July ruling, the Legislature has not taken up any bill to preserve the current tipped minimum wage scale. But the offices of both House Speaker Joe Tate, D-Detroit, and Sen. Majority Leader Winnie Brinks, D-Grand Rapids, say they are considering the issue and taking in feedback on the issue.

Backers of the original petition efforts to increase minimum wage argue tipped workers currently receive a "subminimum wage" and believe eliminating the tip credit in Michigan will raise the wage level for restaurant workers in the state.

Seven states — Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington — plus Washington, D.C., do not currently have a tipped minimum wage, according to human resources platform Paychex.

Wait, what was that about paid sick leave?

The other, often less considered part of the Supreme Court’s ruling, dealt with the state’s paid sick time laws.

In 2018, along with the minimum wage petition initiative, another petition effort sought to expand paid sick time in Michigan.

That petition originally intended to require Michigan employers to provide one hour of paid sick time for every 30 hours of work. Employers with fewer than 10 employees would have to allow employees to accrue up to 40 hours of paid sick time annually, and employers with 10 or more would have to allow employees to accrue up to 72 hours of paid sick time per year.

In 2018, the Legislature adopted the petition language but amended it to remove requirements for employers with fewer than 50 employees. But the Supreme Court’s ruling means those exemptions will go away on Feb. 21, 2025, expanding paid sick time in Michigan.

Contact Arpan Lobo: [email protected]

This article originally appeared on Detroit Free Press: Minimum wage in Michigan: Court ruling clarifies increase for 2025