Payroll Briefs

Michigan Minimum Wage Increase Blocked By State Court of Appeals

February 3, 2023

On Thurs., Jan. 26, a panel of Michigan Court of Appeals judges overturned the lower court’s ruling which would have raised Michigan’s minimum wage to $13.03 per hour and increased the tipped minimum wage to $11.73 an hour by Feb. 19, 2023. This new ruling, which took effect immediately, determined the “adopt and amend” strategy is not explicitly prohibited in the constitution, and therefore legal. This means Michigan’s hourly minimum wage will remain at $10.10 and will not increase to reflect the initial version of the 2018 proposal. 

History Behind the Legislation 

In 2018, the national advocacy group One Fair Wage sought to increase Michigan’s minimum wage to $15.00 per hour over the course of a five-year schedule. Under this proposed plan, minimum wage would have exceeded $12.00 per hour in 2022, $13.00 per hour in 2023 and so on.  

Prior to adopting the proposal as law, instead of reaching a minimum wage of $12.00 per hour by 2022, the legislature changed the year to “2030,” expecting to reach an hourly wage rate of $12.05 by that year. The proposal also included a significant rise in minimum wage for tipped workers, increasing their wage to above $11.00 by 2023. Michigan lawmakers nixed that part of the proposal entirely. 

In 2018, Michigan’s Improved Workforce Opportunity Wage Act was passed. This act raised the minimum wage on Jan. 1, 2023, from $9.87 per hour to $10.10 per hour, while the tipped employee minimum wage was raised to $3.84 per hour. 

In July 2022, a Michigan Court of Claims judge ruled that the legislature’s changing of the language was unconstitutional. This ruling was appealed by state lawyers, pushing the case to Michigan’s Court of Appeals. 

Moving Forward 

With the recent ruling, many employers welcome the news as the decision eases fears the consequences the Feb. 19 deadline posed to their business. Many in the restaurant industry were anxious over the lower court’s decision, fearing the 205% increase in tipped employee minimum wage would result in job loss and closures all around the state.  

Although the Appellate ruling was a relief to restaurants and other businesses, it is ultimately disappointing for workers’ rights advocates. In the future, we expect a high likelihood of the Michigan Supreme Court to become involved to resolve the issue. 

DM Payroll Solutions has adjusted its proprietary software accordingly to account for the changes to minimum wage amounts. Should you need further clarification on the legislation or have questions on how this may impact your business, contact DM Payroll Solutions. Our payroll advisors, and affiliate CPAs, stand ready to assist. Contact us today