Background: The “Adopt and Amend” Controversy
In 2018, Michigan’s legislature adopted two citizen-initiated laws: the Improved Workforce Opportunity Wage Act (IWOWA) and the Earned Sick Time Act (ESTA). Shortly after adoption, the legislature amended both laws, reducing their scope. This “adopt and amend” approach was challenged in court.
On July 31, 2024, the Michigan Supreme Court ruled that the legislature’s actions were unconstitutional, reinstating the original versions of both laws. The court set February 21, 2025, as the effective date for these reinstated laws.
💵 Minimum Wage Increases: 2025 and Beyond
The reinstated IWOWA outlines a schedule for minimum wage increases:
February 21, 2025: $12.48 per hour
February 21, 2026: $13.29 per hour
February 21, 2027: $14.16 per hour
February 21, 2028: $14.97 per hour
February 21, 2029: Adjusted for inflation
February 21, 2030: Adjusted for inflation
These increases are based on the original IWOWA schedule, adjusted for inflation.
Tipped Wage Adjustments and Elimination of Tip Credit
The reinstated law also phases out the tip credit, increasing the tipped minimum wage as follows:
February 21, 2025: 48% of the standard minimum wage
February 21, 2026: 60%
February 21, 2027: 70%
February 21, 2028: 80%
February 21, 2029: 90%
February 21, 2030: 100% (eliminating the tip credit)
This gradual increase aims to align tipped workers’ wages with the standard minimum wage by 2030.
🧾 Paid Sick Leave Requirements
The reinstated ESTA mandates that employers provide paid sick leave:
Employers with 10 or more employees: Up to 72 hours of paid sick leave annually
Employers with fewer than 10 employees: Up to 40 hours of paid and 32 hours of unpaid sick leave annually.
This applies to all employers, regardless of size, expanding coverage compared to the previous law.
📅 Key Dates to Remember
February 21, 2025: Effective date for reinstated IWOWA and ESTA
February 21, 2026–2030: Annual minimum wage and tipped wage adjustments.
FAQ
Q: What is the new minimum wage in Michigan starting February 21, 2025?
A: $12.48 per hour.
Q: How will the tipped minimum wage change?
A: It will increase annually, reaching parity with the standard minimum wage by 2030.
Q: Are all employers required to provide paid sick leave?
A: Yes, with specific requirements based on the number of employees.
Q: Can the legislature alter these reinstated laws?
A: Yes, but any changes would require new legislation and approval by the governor.