An ongoing legal battle that originated in 2018 has received a ruling from the Michigan Supreme Court, stating that the “adopt and amend strategy” used for the Wage Act and Earned Sick Time Act was unconstitutional, reinstating the original initiatives in their unamended form.
Major changes to paid sick time effective February 21, 2025
The Earned Sick Time Act will be significantly altered from the 2019 version of the legislation.
Most notably, ALL employers with at least one employee will be required to offer paid sick leave. Larger businesses will have to offer 72 hours as of February 21, 2025 and employers with under 10 employees will be required to offer 40 hours mandatory paid leave PLUS up to 32 hours unpaid. All employees will earn one hour of paid sick leave for every 30 hours of work, but employers could offer a faster accrual rate.
Businesses that already offer paid leave will face certain challenges with the new mandate and will experience a rise in costs. One such challenge is the implementation of an accrual-based system and the actual tracking of the accrued time. Another will be for employers that offer a “bank” of leave time that includes both sick time and vacation will have to separate them, likely cutting vacation time to offset the increase in sick time because it is not feasible for employers of this scale to offer the mandatory sick time plus an additional allotment for vacation.
The new law applies to part-time, per diem and temporary workers, which goes beyond similar laws in other states. It also allows medical leave for meetings and child’s school or daycare, related to several different factors.
Changes to minimum wage and elimination of tip credit
The reinstatement of the Michigan Minimum Wage Increase Initiative will have the most profound impact on business owners in the hospitality industry.
| Date | Minimum Wage | Tip Credit |
| 2025 | The minimum hourly wage will be $10.00 plus the state treasurer’s inflation adjustment, using July 31, 2024, as the endpoint for that calculation. Currently $10.33 | The tip credit will be 48% of minimum wage. |
| 2026 | The minimum hourly wage will be $10.65 plus the state treasurer’s inflation adjustment, using July 31, 2024, as the endpoint for that calculation. | The tip credit will be 60% of minimum wage. |
| 2027 | The minimum hourly wage will be $11.35 plus the state treasurer’s inflation adjustment, using July 31, 2024, as the endpoint for that calculation. | The tip credit will be 70% of minimum wage. |
|
2028 |
The minimum hourly wage will be $12.00 plus the state treasurer’s inflation adjustment, using July 31, 2024, as the endpoint for that calculation. |
The tip credit will be 80% of minimum wage. |
|
2029 (and after) |
The state treasurer shall calculate the inflation-adjusted minimum wage |
The tip credit will no longer exist. |
As of February 21, 2025, the effective minimum wage will rise to $12.50 per hour plus the applicable inflation adjustment and the minimum tipped wage will be 48 percent of the minimum wage in 2025. These wages will increase incrementally in the years following as well as the percentage of the minimum tipped wage, until 2029 when the Michigan treasurer will set the inflation adjusted minimum wage which will be equal to the minimum tipped wage. The following table shows the schedule of increases and the phased in elimination of the tip credit.
Next steps
Industry leaders and state economic officials have been extremely critical of the legislation and have implored Governor Whitmer to take action to alter the law before it becomes effective. Lawyers are advising their clients to begin the process sooner than later, but to wait until the new law absolutely has to be implemented to allow any potential changes to come.
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