Michigan judge restores minimum wage, paid leave laws gutted by Legislature

• Judge rules lawmakers violated constitution by adopting then quickly amending wage and sick leave initiatives
• Ruling overturns GOP amendments, making original initiatives law
• Business groups fear impact, urge delayed implementation

July 21: Michigan seeks to delay minimum wage, paid leave hike amid court appeal

LANSING — Michigan’s Republican-led Legislature violated the state constitution when it adopted and then quickly weakened minimum wage and paid sick leave initiatives in 2018, a Court of Claims judge ruled Tuesday in a major decision.

The opinion, by Judge Douglas Shapiro, reinstates the original initiatives as drafted by liberal advocacy groups, directing Michigan to increase its minimum wage law to $12 an hour — up from $9.87 — and require thousands of previously exempt small businesses to provide paid sick leave to workers.

“Once the Legislature adopted the Earned Sick Time Act and the Improved Workforce Opportunity Act, it could not amend the laws within the same (two-year) legislative session,” Shapiro wrote in his 25-page opinion. 

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“To hold otherwise would effectively thwart the power of the People to initiate laws and then vote on those same laws — a power expressly reserved to the people in the Michigan Constitution,” added the judge, who was appointed to the bench in 2009 by then-Gov. Jennifer Granholm, a Democrat.

Michigan business groups expect the ruling will be appealed and said they do not believe employers have to immediately comply with the terms of the initiatives unless or until the Michigan Department of Labor and Economic Opportunity (LEO) indicates it will begin enforcement.

The regulatory agency is "reviewing the judge’s decision to determine next steps and ensure the state is in compliance with the law," LEO spokesperson Jason Moon said in a statement, noting the department “is committed to making sure that workers and families have access to the pay and benefits they deserve.”

Unions and worker rights groups hailed the court ruling as a victory for employees, but leading business organizations argued the decision could have a “crippling effect” on employers already offering high pay to overcome labor shortages worsened by the COVID-19 pandemic.

Justin Winslow, president and CEO of the MIchigan Restaurant Lodging Association, urged state courts to delay immediate implementation of the 2018 initiatives during what he called an “inevitable appeals process.”

Among other things, the minimum wage initiative directs the state to eliminate a lower tipped wage for restaurant workers by 2024, ensuring they, like other workers, would earn at least $12 per hour, up from the current industry guarantee of $3.75 per hour. 

“If this were to be immediately implemented, the chaos it would wreak on the already battered hospitality industry during peak travel season would be almost inconceivable,” said Winslow, whose organization lobbies for the $40 billion Michigan hospitality industry.

It’s not immediately clear if the state will appeal the ruling or request a temporary delay from its immediate implementation. Democratic Gov. Gretchen Whitmer’s office is “working through the decision right now,” spokesperson Bobby Leddy said Wednesday morning. 

Attorney General Dana Nessel, a fellow Democrat, is a named defendant in the case, but she celebrated Tuesday’s ruling, calling it a “victory for the residents of Michigan whose efforts to bring an issue before their elected representatives were wrongly circumvented by the Legislature in 2018.”

However, Nessel’s office argued both sides of the case in court after forming two, independent lawyer teams. The assistant attorneys general who defended the GOP amendments could now appeal the judge’s decision, according to business advocacy groups. 

House and Senate Republicans had attempted to intervene in the case and defend their 2018 amendments, but Shapiro previously denied their request, said Matt Sweeney, a spokesperson for Senate Majority Leader MIke Shirkey, R-Clarklake. 

“While we certainly disagree with the ruling, this judge denied our motion to intervene so the Legislature is not technically a party in this case,” Sweeney said in a statement to Bridge Michigan. 

House Republicans are “reviewing the ruling,” added spokesperson Gideon D’Assandro.

The Improved Workforce Opportunity Wage Act” – now state law, according to Shapiro – directed Michigan to raise its minimum wage to $12 an hour by Jan. 1 of this year and then increase it annually based on inflation. It also eliminates the far lower tipped wage for restaurant employees by 2024.

"Workers have been fighting this subminimum wage, which has been a source of sexual harassment and racial inequity, for decades," said Saru Jayaraman, President of One Fair Wage, which supported a Michigan coalition that collected more than 400,000 voter signatures for the initiative. 

The Michigan Court of Claims "vindicated the rights of these millions of workers, and millions of voters, to demand that workers in Michigan be paid a full, livable wage with tips on top," he said in a statement. 

The Earned Sick Time Act, meanwhile, requires employers to provide up to 72 hours of paid sick leave to employees each year, up from 40 hours under the Republican amendments, and extend those benefits to workers at small businesses with fewer than 50 employees, which the GOP had exempted.

If implemented, those rules could impact "hundreds of thousands" of companies with fewer than 50 employees, said Brian Calley, president of the Small Business Association of Michigan and the state's former lieutenant governor under Snyder. 

Calley's group is directing small businesses to await any enforcement guidance from the Department of Labor and Economic Opportunity before making any changes to their minimum wage or sick leave policies. 

The Michigan Supreme Court could ultimately decide the matter since it is a "constitutional question," Calley told Bridge Wednesday morning.

The paid sick leave initiative raises many questions for small businesses, Calley added: It's not clear whether employers could count "leave banks" that combine sick leave and vacation time, for example. 

And while many employers already offer paid leave, the initiative could force companies to extend those policies to part-time employees as well, he said. 

The Michigan Chamber of Commerce is “incredibly” concerned about the ruling and is “mapping out possible options moving forward,” said Wendy Block, vice president of advocacy for the powerful lobbying group.

“While we are still sorting through the details, we are stunned by this determination and the many varied implications,” she said in an email to Bridge. “The talent shortage has employers already paying historic wages and benefits – all while facing rising inflation and supply chain chaos – just to keep the doors open.”

Under the Michigan Constitution, the Legislature has 40 days to adopt initiatives, propose alternatives or do nothing and allow them to advance to the general election ballot for voters to decide. 

But legislative Republicans took a different approach in 2018 when they adopted the liberal initiatives but then gutted them before they took effect. Then-Gov. Rick Snyder signed the lame-duck changes into law weeks before leaving office, arguing the original initiatives would have resulted in “cost and compliance burdens” for job providers that could hurt the state economy. 

The Legislature had acted with the blessing of then-Attorney General Bill Schuette, a Republican, who had issued an official opinion stating that nothing in the Michigan Constitution prohibited the adopt-and-amend maneuver.

Schuette’s opinion contradicted a 1964 opinion by then-Attorney General Frank Kelley, a Democrat, who held that adopting and amending an initiative in the same session would violate the “spirit and the letter” of the 1963 constitution. 

Kelley’s opinion carried more weight because it was issued one year after Michigan voters approved the current state constitution and had stood for 55 years, Shapiro wrote Tuesday in his Court of Claims ruling. 

If courts allowed the Republican maneuver to stand, “it would mean that anytime a simple majority of the Legislature opposed the content of an initiative, it could, by legislative sleight-of-hand, prevent the initiative from ever becoming law without ever allowing the People to vote on it,” Shapiro wrote. 

“This would plainly violate Article 2, § 9 of our Constitution, which reserves such power to the People.”

The Michigan Supreme Court declined to weigh in on the matter in 2019, denying a request by the GOP-led Legislature to issue an advisory opinion. 

Attorney Mark Brewer called Tuesday’s ruling "a complete victory" for his clients who had sued to restore the original initiative language, including Michigan One Fair Wage, Michigan Time to Care, the Restaurant Opportunities Center  and Mothering Justice. 

The ruling "tells the Legislature that you've got to respect the initiative process," Brewer said. "You cannot sabotage the initiative process by adopting proposals — keeping voters from voting on them — and then gutting them."