LANSING, Mich. — At the start of the new year, Michigan's minimum wage increased from $9.87 to $10.10 per hour, but that increase could have been much higher.
The minimum wage increase is because of Michigan's Improved Workforce Opportunity Wage Act of 2018, which is currently pending litigation that may affect current and future minimum wage increases.
The act was originally a petition initiative organized by One Fair Wage in 2018, gaining enough support to appear on the November 2018 ballot.
However, instead of the initiative appearing on the ballot, the Michigan Legislature chose to pass it during its 2018 legislative session.
When the Improved Workforce Opportunity Wage Act was passed by the legislature on Sept. 5, 2018, the act called for a minimum wage increase of 65 cents or more every year until the minimum wage in the state reached $12 in 2022.
The act also included changing tipped worker wages from 38% of the minimum wage to 100% of the minimum wage over the course of several years.
Just two months after being passed, an amendment to the act was signed into law by Gov. Rick Snyder after passing in both state legislative chambers. The amendment to the act, which is being challenged in court, changed the act in a variety of ways including changing the increase in the minimum wage to $12.05 by 2030 instead of $12 by 2022.
The legislature also amended the tipped worker wage increase to remain at 38% of the current minimum wage indefinitely instead of increasing it to 100% of the current minimum wage in 2024 and beyond, as originally adopted.
The current litigation challenges these amendments to the act, calling it unconstitutional.
Michigan Minimum Wage Lawsuit
The tactic used by the legislature of adopting a petition before it reaches the ballot and then later amending the legislation is known as adopt-and-amend.
On July 19, 2022, the Michigan Court of Claims struck down the amendments to the legislation but issued an order staying the effect of the decision until Feb. 19, 2023.
In the court's decision, the question of constitutionality is based on Article 2, Section 9, which the court describes as follows:
"Article 2, § 9 grants the Legislature three options to address a law proposed through the initiative process—enact the law, reject the law, or propose an alternative. Article 2, § 9 does not permit the Legislature to adopt a proposed law and, in the same legislative session, substantially amend or repeal it."
The conclusion of the court, presided over by the Honorable Douglas B. Shapiro, was to void the amendments to the Improved Workforce Opportunity Wage Act and revert the act to its original language as passed in September.
The court issued the following conclusion as part of its ruling:
"Both the letter and spirit of Article 2, § 9 support the conclusion that the Legislature has only three options to address voter-initiated legislation within the same legislative session—adopt it, reject it, or propose an alternative. Once the Legislature adopted the Earned Sick Time Act and the Improved Workforce Opportunity Act, it could not amend the laws within the same legislative session. To hold otherwise would effectively thwart the power of the People to initiate laws and then vote on those same laws—a power expressly reserved to the people in the Michigan Constitution."
In order to allow businesses time to prepare for the change in legislation, the court issued a stay on its decision until the previously mentioned date in February.
Therefore, the current change to the minimum wage laws in Michigan in the new year is listed below.
Michigan Minimum Wage in 2023 and Beyond
Effective Jan. 1, 2023:
- The minimum hourly wage will increase to $10.10 per hour.
- The 85% rate for minors aged 16 and 17 will increase to $8.59 per hour.
- The tipped employee rate of hourly pay increases to $3.84 per hour.
- The training wage of $4.25 per hour for newly hired employees ages 16 to 19 for their first 90 days of employment remains unchanged.
The Court of Claims' ruling that the adopt-and-amend tactic was unconstitutional has been appealed. The final decision in the appeal will greatly affect what the Improved Workforce Opportunity Wage Act does in the future.
If the appeal is denied or if the Court of Claims' ruling is upheld through the appeal, the act will revert to its original language.
Original petition's minimum wage scale:
- 2018 - $9.25
- 2019 - $10.00
- 2020 - $10.65
- 2021 - $11.35
- 2022 - $12.00
Starting in 2023, the state minimum wage would adjust for increases in the consumer price index each year unless the unemployment rate of the previous year was 8.5% or higher.
Original petition's tipped worker wage scale:
- 2019 - 48% of minimum wage
- 2020 - 60% of minimum wage
- 2021 - 70% of minimum wage
- 2022 - 80% of minimum wage
- 2023 - 90% of minimum wage
- 2024 - 100% of minimum wage
If the final results of the lawsuit lift the stay and revert the act to the original petition language passed by the legislature, the minimum wage rates in 2023 will be:
- Michigan Minimum Wage Rate: $13.03
- The 85% rate for minors aged 16 and 17: $11.08
- Tipped employees would be eligible for 90% of the full minimum wage: $11.73
- The training wage of $4.25 per hour for newly hired employees ages 16 to 19 as a training wage for their first 90 days of employment remains unchanged.
If the appeal is accepted and the Court of Claims' decision is struck down, the language of the Improved Workforce Opportunity Wage Act will remain as amended.
Minimum wage scale as amended by the legislature:
- 2024 - $10.33
- 2025 - $10.56
- 2026 - $10.80
- 2027 - $11.04
- 2028 - $11.29
- 2029 - $11.54
- 2030 - $11.79
- *2031 - $12.05
*The minimum wage increase did not occur in 2021 due to the unemployment rate for 2020 exceeding 8.5%. Because of this, the final minimum wage increase is set to occur in 2031 instead of 2030.
Tipped worker wages as amended by the legislature remain at 38% of the minimum wage.
Michigan Minimum Wage Case Appeal and Future Petition
The Michigan Court of Appeals is expected to make a decision on the appeal case sometime in February, but that decision will likely be appealed as well. Chances are, the Michigan Supreme Court will have to make a final decision on the case before it becomes clear what Michigan's minimum wage laws will look like in the future.
Despite the act currently being in legislative limbo, the original petition designers have moved forward on a new minimum wage petition.
One Fair Wage announced that they submitted 610,000 signatures for a new petition initiative in November of 2022. The new petition aims to put an initiative on the ballot in 2024 to increase the minimum wage to $15. Approval of this new petition initiative is pending.
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