Michigan Supreme Court strikes down 'adopt and amend,' setting up increase to minimum wage

The Michigan Supreme Court ruled 4-3 on Wednesday the state Legislature lacked the authority to adopt and amend petition language for a pair of ballot initiatives in 2018 that aimed to increase the state's minimum wage scale and expand earned sick time for workers.

Justices said the "adopt and amend" tactic is unconstitutional because the Legislature circumvented the petition initiative process in 2018. Under the opinion issued Wednesday, increases to Michigan's standard minimum wage, tipped minimum wage and an expansion of the state's earned sick time laws are slated to take effect in February.

"We hold that this decision to adopt the initiatives and then later amend them in the same legislative session (what has been referred to as “adopt-and-amend”) violated the people’s constitutionally guaranteed right to propose and enact laws through the initiative process," justices wrote in a majority opinion.

The biggest change after the ruling may be the eventual elimination of the tipped minimum wage ― the lower hourly wage paid to workers like servers and bartenders who are expected to make the bulk of their earnings through tips.

Michigan's minimum wage is currently $10.33 an hour. In their ruling, justices directed the state treasurer to set a new wage scale that accounts for inflation between 2018 and 2024. Minimum wage will be $10 an hour plus an inflation adjustment in 2025, with the tip credit rising to 48%. It increases to $10.65 plus an inflation adjustment in 2025, with the tip credit rising to 60%. In 2027, it will be $11.35 plus an inflation adjustment, with the tip credit rising to 70%, before minimum wage finally rises to $12 plus an inflation adjustment, with the tip credit at 90%.

Don Grimes, an economist at the University of Michigan, said minimum wage in February 2025 could be about $12.58 an hour, due to the inflation adjustment.

In 2029 and after, the state treasurer will be tasked with determining an inflation-adjusted minimum wage and the tip credit will no longer exist.

"That transition time presumably existed to provide employers with time to prepare to comply with these new laws, which dramatically alter pay and time-off policies," justices wrote of the timeline.

Wednesday's ruling is a significant turning point in a political and legal battle that has stretched more than a half-decade.

In 2018, organizers circulated petitions to raise the state's minimum wage to $12 per hour by 2022 and eventually remove the lower minimum wage for tipped workers, instead bringing the minimum wage for tipped workers to the same level as nontipped workers. After 2022, minimum wage would be adjusted for inflation annually.

But later that year, the Legislature adopted the initiative’s language and amended it following the general election.

The Improved Workforce Opportunity Wage Act was created, but the Legislature amended the initiative so Michigan's minimum wage would gradually increase to $12.05 by 2030. Lawmakers also amended the initiative language to keep the tipped minimum wage at 38% of the standard minimum wage.

A second 2018 initiative effort, led by a group called Michigan Time to Care, circulated a petition to require employers with fewer than 10 employees to allow employees to accrue up to 40 hours of paid sick time annually and employers with 10 or more employees to accrue up to 72 hours of paid sick time per year.

The Legislature adopted the language creating the Earned Sick Time Act, but amended it to remove requirements for employers with fewer than 50 employees.

Advocates supporting both petition efforts say the laws ultimately created by the Legislature weakened the initial intent of both initiatives.

Those advocates eventually sued the Legislature. While a Court of Claims judge ruled in their favor in 2022, the Court of Appeals reversed the ruling in 2023, setting up the battle at the Michigan Supreme Court.

In the majority opinion Wednesday, justices wrote while the Michigan Constitution is ambiguous when it comes to the Legislature's authority to adopt and amend a petition initiative within the same session, the constitution must be generally interpreted in favor of the people; in this case, the organizers of the petition initiatives and those who signed them.

"Indeed, by attempting to both reject an initiative and sidestep the people, adopt-and-amend impermissibly “thwart[s]” the power that the people reserved for themselves," justices wrote.

Ruling in the majority opinion were Democratic-nominated Justices Elizabeth Welch, Richard Bernstein, Megan Cavanagh and Kyra Harris Bolden.

Chief Justice Elizabeth Clement, and Justices David Viviano and Brian Zahra, all nominated by Republicans, dissented.

In the dissenting opinion, Zahra wrote the court lacks the authority to enact the proposed initiatives and adjust them for inflation. Zahra opined the court's options were either to uphold the Court of Appeals ruling that the Legislature had the authority to adopt and amend the petitions, or to rule the petitions should be enacted as they were proposed in 2018.

"In the clearest way possible, the Court exercises legislative power, drafting new legislation that has never been approved by the Legislature or approved by the voters," Zahra wrote.

Stakeholders in the hospitality industry, from restaurant owners and operators to servers and bartenders, were keenly anticipating the high court’s ruling.

Plaintiffs in the case celebrated Wednesday's ruling. Chris White, director of the Restaurant Opportunities Center of Michigan, said the ruling will bring needed increases to wages in Michigan.

"The message that the Supreme Court sends is that the right to petition should always be respected, and the democratic process still stands strong in Michigan," White said in an interview.

Wendy Block, senior vice president of business advocacy for the Michigan Chamber, said the ruling will change the state's restaurant industry.

“The ramifications of this decision will be deep and felt by job providers and workers alike,” Block said in a statement. “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.”

A survey among restaurant owners published in June by the Michigan Restaurant and Lodging Association (which filed briefs in support of the Legislature in the case) found a majority of the 186 restaurant operators surveyed said they would increase prices and lay off employees to accommodate for the rise in wages.

MRLA President and CEO Justin Winslow said the ruling "strikes a likely existential blow to Michigan's restaurant industry."

But the impact isn't universal; some restaurants have consistently paid at or above minimum wage.

Jordan Smith, chef and owner of Coeur restaurant in Ferndale, says since the restaurant's opening in 2023 none of its workers are paid less than $10 an hour, slightly less than the current $10.33 an hour minimum wage.

"It's something that is really important to us because of the care and effort we put into our work," Smith said. "People are working hard and need to be paid what they are worth."

Other groups called on lawmakers to address the increases to minimum wage. Michigan House Minority Leader Matt Hall, R-Richland Township, said the Legislature should reconvene from its summer break to pass legislation to "save Michigan jobs."

“The Legislature must return to the Capitol immediately, because this decision will completely disrupt the livelihoods of hard-working Michiganders," Hall said in a statement. "Restaurants and other small businesses will have to raise their prices, tipped workers will take home less pay, and some people will lose their jobs."

Senate Majority Leader Winnie Brinks, D-Grand Rapids, said in a statement, “Our legal team will be reviewing the Supreme Court’s decision over the following days." House Speaker Joe Tate, D-Detroit, applauded the court's ruling for providing clarity on the Legislature's authority and said his office is reviewing the opinion.

White said the Legislature should respect the court's ruling.

"We're confident the Legislature will not take the state backwards," he said.

Free Press staff writers Dave Boucher and Susan Selasky contributed.

Contact Arpan Lobo: [email protected]

This article originally appeared on Detroit Free Press: Michigan Supreme Court rules against Legislature in adopt, amend case