LANSING — House Speaker Matt Hall is pitching a compromise as Michigan legislators work to potentially change tipped minimum wage and paid medical leave requirements set to take effect in just more than a week.
A key component: Exempting employers with 10 or fewer employees — and nonprofits of any size — from having to provide earned sick time. Another: increasing the subminimum wage, 38% of the regular minimum as long as servers’ tips make up the difference, to 50% by 2036.
Under the laws due to take effect Feb. 21, all employers with at least one employee will be mandated to offer 40 or 72 hours of paid leave annually depending on the business size. The tipped wage will be phased out by 2030.
Legislators are facing dueling pressures — from business owners who warn of financial costs and other ramifications if the pending laws are not scaled back and from union leaders and others who say workers deserve better pay and benefits and the laws should stay intact. If a deal is not struck today, Democratic Gov. Gretchen Whitmer is urging lawmakers to delay the new laws until July 1 to buy more time for negotiations.
Keep up with all things West Michigan business. Sign up for our free newsletters today.
Hall’s proposed 50% tipped wage is intended to meet in the middle between what the House supported, to keep it at 38%, and what the Senate is mulling, to gradually move it to 60% by 2035. The general minimum wage, which will increase nearly $2 per hour to $12.48 next week and $14.97 within three years, would see a minor change — rising to $15 per hour in 2028.
The House-passed paid sick leave bill would keep in place an existing exemption for employers with fewer than 50 workers. A bill sponsored by Sen. Sam Singh, D-East Lansing, and passed by the Senate Regulatory Affairs Committee on Wednesday would still require that employers with at least one employee offer a minimum amount of leave but let those with fewer than 25, not 10, provide 40 hours paid leave and 32 hours unpaid rather than 72 hours paid.
Proposing to exempt employers with 10 or fewer employees is an attempt to avert “chaos” for the smallest of businesses, those least able to handle the mandate because they have few workers to cover if others are sick, a source familiar with Hall’s thinking told Crain’s. Employers with 11-50 employees would have to offer 40 hours of paid leave but not 32 hours of unpaid.
Hall is trying to find a middle ground, the source said, by going higher on the tipped wage and lower on the size of the small business exemption.
He is also proposing, among other things, to:
- Exempt seasonal, variable-hour and rail employees and those whose primary work location is not in Michigan.
- Ensure that part-time workers get 24 hours of frontloaded sick time.
- Exempt overtime, holiday pay, bonuses, commissions and tips from the calculation of an employee’s base wage for the purposes of paying earned sick time.
- Allow paid time off banks to include sick leave days.
- Specify that frontloading is allowed and that it does not require the tracking and calculation of accrual, carryover or payout of unused sick time.
- Require employees to follow federal Family Medical Leave Act requirements related to notifying employers that they will have to miss work.
“I have come to the table in good faith, trying to meet Senate Democrats halfway, because I believe we can achieve a balanced approach that helps hardworking Michiganders without forcing a big part of our small business community to close their doors for good,” Hall said in a statement.
Democratic Senate Majority Leader Winnie Brinks’ spokesperson declined to comment on the proposal.
Singh said Wednesday that a new version of his leave bill is coming on the Senate floor and includes changes to address businesses’ “no-call, no-show” concerns and matters related to accrual, tracking and frontloading. He also said it will not allow overtime and other extra pay to be considered normal hourly pay and give workers three years to file complaints with the state, similarly to what the House proposed.
“There’ve been some other ideas that have been floated out today talking about newer businesses (that) were created after this act has been put forward,” Singh said. “Can we look at how we treat them maybe a little differently than an existing business?”
He said talks will continue on the definition of a “small business” — a key question as Republicans want to exempt small businesses and Democrats do not, instead preferring to revise the threshold at which they must provide five or nine days of leave.
“I will continue those conversations with my colleagues on both sides of the aisle as well as in both chambers,” Singh said. “We still do see potential changes that I think will make the administration of the earned sick time much more efficient and much more user-friendly. It still provides in my opinion basic protections and allows every employee to have access to this as in other states.”
