Minimum, tipped wage increase to be decided by Michigan Supreme Court
Michigan Supreme Court justices heard oral arguments Thursday in a case that could have major ramifications for the state’s employment laws, as advocates for an increased minimum wage seek the reversal of a Court of Appeals opinion ruling that found the Michigan Legislature did not act unconstitutionally when it adopted petition language and amended in the same session in 2018.
The fight over the “adopt and amend” tactic now has Michigan’s minimum wage, tipped minimum wage and paid leave policies hanging in the balance.
A group of organizations fighting for an increased wage floor and greater sick time benefits for employees argues that the petition initiative process in Michigan would be severely weakened if the Court of Appeals ruling stood.
"For the first time in the 105 years the people of Michigan have enjoyed the constitutional right to create laws, the Legislature usurped that right in 2018 ... for the purpose of gutting them," said Mark Brewer, an attorney representing the plaintiffs. Brewer and Solicitor General Ann Sherman argued the state constitution clearly delineates powers between the state Legislature and people directly, which is why a petition initiative process is in place.
“Essentially, the right to initiative process will end in Michigan if adopt and amend is upheld," Brewer said. "If the power of adopt and amend is upheld for the Legislature, they will use that to eviscerate the initiative process.”
But state lawyers defending the Legislature’s actions say because the state constitution doesn't explicitly bar the Legislature from adopting a petition initiative and amending it in the same session, it has the authority to do so. If the people believed the petition process was circumvented, they retain the power to try and launch a referendum on the enacted law.
"The idea that the people have been cut out of the process is wrong," said Eric Restuccia, deputy solicitor general arguing on behalf of the Legislature.
How 'adopt and amend' ended up in front of the Michigan Supreme Court
In July 2022, Court of Claims Judge Douglas Shapiro ruled the Michigan Legislature acted unconstitutionally in 2018 when it adopted voter-initiated legislation aimed at raising the state’s minimum wage by 2022 and eventually eliminating the tipped minimum wage but amended the initiative’s language to put in lower wage thresholds. A group including Michigan One Fair Wage, MI Time to Care, and the Restaurant Opportunities Center of Michigan sued.
Initially, ballot organizers sought to raise Michigan’s minimum wage to $12 an hour by 2022, as well as increase the tipped minimum wage before eventually eliminating it. The tipped minimum wage is the lower hourly rate given to workers who are expected to make the bulk of their wages through tips, like bartenders and restaurant servers. Because the minimum wage increase was also supposed to account for inflation, the minimum wage would currently be over $13 an hour had the initial petition language taken effect.
Instead, lawmakers adopted the petition language but amended it to delay the increase to $12.05 an hour by 2030. The adopted language also maintained the tipped minimum wage at 38% of the regular minimum wage.
Currently, Michigan’s minimum wage is $10.10 an hour, and the tipped minimum wage is $3.84 an hour. The figures are slated to increase to $10.33 an hour and $3.93 an hour on Jan. 1, 2024, according to the Department of Labor and Economic Opportunity.
Shapiro's ruling also would have enacted changes to Michigan’s paid sick leave requirements for employers. A separate petition initially 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 employees or more would have to allow them to accrue up to 72 hours of paid sick time per year.
The Legislature adopted the petition and amended its language to remove requirements for employers with fewer than 50 employees.
Shapiro’s ruling found that the Legislature acted unconstitutionally when it adopted and amended petition language in the same legislative session. The ruling would have sparked wage changes in Michigan, but state lawyers appealed the decision before the Court of Appeals reversed it in February, wiping out the changes for now.
Appeals judges wrote there is no explicit language in the Michigan Constitution banning the Legislature from adopting laws initially brought forward by petition initiative and amending those laws in the same legislative session.
Soon after the Court of Appeals ruling was published, plaintiffs appealed the decision to the Michigan Supreme Court.
Court shouldn't consider Legislature's motives, lawyer argues
During Thursday's hearing, Justice Richard Bernstein asked Restuccia if the adopt and amend tactic could cause voters to lose faith in the democratic process if a Legislature can adopt and amend petition language and prevent it from ever getting to the polls.
"At the end of the day, when you’re talking about this in terms of people’s trust in governance, does what happened fit with the general perspective of letting the people have their day?" Bernstein asked.
“The question about the motives of the Legislature is really beyond this court’s purview," Restuccia said, who argued the constitution is "unambiguous" in not barring the tactic. While the Court of Appeals ruling was unanimous, Judge Michael Kelly wrote in a separate concurring opinion the tactic used by the Legislature was "anti-democratic" and circumvented the original intent of the petition initiative organizers, although he called it "permissible."
Justice Brian Zahra, at one point, appeared receptive to Restuccia's argument that the constitution does not explicitly bar the adopt and amend practice, asking Sherman, "Don’t you think the drafters would have put very clear language that the adopt and amend in the same session couldn’t take place?"
Sherman said previous courts have ruled that the express absence of language on an issue has not been interpreted to mean a tactic is permitted.
Justice Elizabeth Welch asked both parties how any potential remedy would be delivered, should the Supreme Court reverse the Court of Appeals ruling, noting that many of the dates initially included in the petition language have already passed.
"This had a phase in, it had specific dates," she said. "It’s hard to ignore the reality ... that our court opinion would come out, the very next day, presumably every employer in Michigan would be out of compliance with no notice. I’m just grappling with how we should handle that."
While Shapiro originally ruled in July 2022, he eventually placed a stay on his ruling that would have prevented the changes to Michigan's minimum wage and paid sick time laws from taking place until February 2023. Those changes, of course, were undone by the Court of Appeals ruling.
Brewer also said plaintiffs were not seeking any backpay or unaccrued sick time that would have built up since 2018, instead were only seeking the laws to change moving forward.
It's unclear when the Michigan Supreme Court will rule.
Workers relying on tips worry about wage changes
Some workers earning the bulk of their wages through tips say being placed on the traditional minimum wage would drastically harm their earning potential, noting they often make far more than $12 an hour once tips are accounted for.
"It would make everybody's lives hard, not only for the servers, but the restaurants," said Brandy Bell, a server at an Anna's House restaurant in Okemos. Bell was speaking during a roundtable event on Tuesday organized by a group opposing the increased minimum wage.
"The way it's been just works for us. I don't know about other restaurants but at mine, our servers make great money," she said.
Restaurant and hospitality industry advocacy groups have decried the potential wage changes, with industry officials saying it would create a fundamental shift to how the restaurant business works in Michigan. A survey published by the Michigan Restaurant and Lodging Association last November found 91% of respondents would increase prices for consumers to make up for added costs and 16% would close their businesses.
Others, however, see the removal of the so-called tip credit as a path toward a more sustainable wage. Roquesha O'Neal, a Detroit restaurant worker and a member of the Restaurant Opportunities Center of Michigan, said restaurant workers relying on tips often fear they won't be able to afford to pay their bills.
"A lot of people live off tips and wages because they have to take care of their family," she said after Thursday's hearing. "So that's why we're fighting for them, it's the fact that our families matter. People matter."
Currently, Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington state don’t have a separate minimum wage for tipped employees, according to the U.S. Department of Labor.
Contact Arpan Lobo: [email protected]. Follow him on X (Twitter) @arpanlobo.
This article originally appeared on Detroit Free Press: Minimum wage increase battle lands at Michigan Supreme Court
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