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Small Business Owner Guide to New Minimum Wage and Paid Sick Leave Requirements

Beginning February 21, 2025 all small businesses operating in the State of Michigan will be subject to new minimum wage and paid sick leave requirements.

These rules are the result of a decision by the Michigan Supreme Court on July 31, 2024.

Read SBAM President & CEO Brian Calley’s statement.

SBAM’s Advocacy Work 

 

Supreme Court Decision

New Rules for Michigan Small Businesses

Barring a legislative solution, starting on February 21, 2025, all employers in the state of Michigan will be subject to new rules on minimum wage, paid sick leave, and tipped wages.

Update: New FAQs released by LEO.

Minimum Wage Increase

Michigan’s current minimum wage is $10.33/hour. This decision sets a new schedule for increases in the minimum wage, but the calculation set forth is very complex.

Original Year Original wage Adjustment Value New Year New Wage New Tip Wage
2019 $10.00 1.24752 2025 $12.48 48%
2020 $10.65 1.24752 2026 $13.29 60%
2021 $11.35 1.24752 2027 $14.16 70%
2022 $12.00 1.24752 2028 $14.97 80%

Review the full schedule, including tipped wage amounts.

Elimination of the Tipped Wage

Michigan law allows employers to pay tipped employees 38% of the minimum wage as long as they earn at least the standard minimum wage with tips included. Most end up earning far more than minimum wage, which is why recent surveys show that 83% of servers do not want the system to change. 

Under this decision, the tipped wage will be phased out and service workers will fall under the regular minimum wage system.

Let’s stand with Michigan’s tipped workers—tell your legislators to keep the system that works!

New Accrual Based Sick Leave Requirements

This decision from the Court requires all employers, including those with fewer than 50 employees, to offer accrual-based paid sick leave to all employees, including part-time. It will require nearly every employer to make changes to the way they accrue sick time. View this grid to read the specific requirements.

UPDATE: The Department of Labor and Economic Opportunity has released new FAQs on the Earned Sick Time Act.

What Can We Do?

Seek a Legislative Solution for ESTA

Now that the election has passed, the Michigan Legislature has returned to Lansing for the last session days of the year. The number one issue on their to-do list should be to implement common-sense changes to the Earned Sick Time Act. 

Please take moment to ask your legislators to get to work on your behalf, and fix the Earned Sick Time Act.

Contact Your Legislators

Additional Resources

On-Demand Webinars & Briefings

SBAM’s Special Briefing

On August 1, 2024 SBAM President & CEO Brian Calley hosted a special member briefing.

Accompanying Slides

Watch Now

Webinar from Warner Norcross + Judd

Allyson Terpsma, Partner with Warner Norcross + Judd, presented this webinar on August 8th.

Accompanying Slides

Watch Now

Earned Sick Time Act FAQs

SBAM’s Brian Calley and Kelli Saunders walk through these FAQs to help small business owners understand the ESTA and how to be compliant.

FAQ Resources

Watch Now

Why Is it Changing?

Prior to the 2018 election, advocates introduced voter initiatives mandating employer-provided paid sick time and a $12 per hour minimum wage. These proposals gathered requisite signatures to appear on the 2018 ballot. However, Michigan’s Constitution mandates that initiatives amending statute first appear before the legislature prior to appearing on the ballot. The legislature adopted the proposals and later amended them to lessen the impact. This action, now called “adopt and amend,” prevented the original proposals from appearing on the ballot. Those who gathered initial signatures filed a lawsuit and raised the legal question of whether a legislature can amend a voter-initiated statute that it adopted within the same two-year legislative term in which it was adopted.

The trial court found in favor of the plaintiffs, saying the ‘adopt and amend’ practice was unconstitutional. The court of appeals disagreed and upheld the practice. The final decision rests in the hands of the Michigan Supreme Court, who announced Wednesday, July 31, 2024, that the legislature’s actions were unconstitutional, meaning that the initially adopted ballot language is now law.

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