After the Michigan Legislature’s lame-duck debacle in December when very little was accomplished to advance the majority Democrat agenda, lawmakers appear poised in the 2025 legislative session to tackle the state’s Supreme Court-mandated minimum wage and paid sick leave laws.

House lawmakers on Thursday advanced House Bills 4001-02 without opposition by the House Select Committee on Protecting Michigan Employees and Small Businesses.

The proposals preserve tipped wages, move toward a higher minimum wage and preserve the intent behind an original paid sick time initiative, according to a news release.

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The bills also address concerns of small business owners who rely on employees to show up, such as in the mom-and-pop retail and restaurant industries, so they are not scrambling to maintain staffing. Another concern is that no-notice sick leave would routinely leave them understaffed and overwhelmed.

The committee heard testimony this week from small business owners and their employees, prompting House Republicans to revisit promises from the previous term. The looming minimum wage and paid sick time laws could spell economic disaster if not addressed, according to this House GOP post.

“This is a major step in the right direction to protect our workers and local, family-owned businesses,” said Rep. Bill G. Schuette, R-Midland, who chairs the committee, in a press release. “I am grateful to the committee for its work, those who came to testify and proud we could send such a strong, bipartisan message on the importance of this legislation.”

House Republicans walked off the job in mid-December over the issue, after business groups and servers lobbied legislators throughout the fall to change laws set to take effect Feb. 21.

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The new rules stem from a July ruling by the Michigan Supreme Court that upheld a citizen initiative to raise the minimum wage, phase out the tipped minimum wage credit, and require employers to offer paid sick leave.

HBs 4001-02 leave the current 38% tip credit since it works for workers. The plans move toward a higher minimum wage year over year, similar to what is set to take effect.

House Bill 4001 proposes a minimum wage hike, beginning with $12 per hour on Feb. 21 and increasing to $15 per hour by Jan. 1, 2029, according to the Legislative Analysis.

House Bill 4002 addresses the “impractical, court-ordered, one-size-fits-all earned sick leave approach that applies to businesses that employ even one person,” according to the release.

In its place, the bill defines an employer as an entity with 50 or more workers and doesn’t subject businesses with less than 50 workers to the requirements. The legislation also lets employees carry over more than 72 hours of unused sick time to an ensuing year if an employer permits, giving added flexibility for workers.

Business groups have maintained the changes will be a death knell to restaurants, hotels, and other service-oriented businesses. Those who work in the restaurant industry also protested – saying they would rather work for tips than earn a higher hourly wage – by organizing rallies and showing up at the Capitol Building.

Without changes, industry leaders predict menu prices could rise as much as 25% or more restaurants will close. A MRLA survey from June 2024 found many restaurants are barely hanging on, and the state’s restaurant industry is still struggling to recover from COVID-19 losses and high inflation.

One survey disclosed that two-thirds of Michigan restaurant operators would need to lay off staff if the mandates are implemented. Additionally, 94% of businesses anticipated significant price hikes for consumers, and one in five full-service restaurants said they could close permanently.

Lawmakers have called the Michigan Supreme Court decision “short-sighted.”

Schuette said the bills will offset the Supreme Court decision’s negative business effects by protecting the livelihoods of service-industry workers and keep many small businesses across Michigan from having to close their doors for good.

The plans now move to the full House for consideration, and lawmakers are pressed for time to get the proposals enacted into law.

“The work of the committee is especially important as we are approaching the Feb. 21 effective date for the Court’s decision,” Schuette said. “As we heard over this week, if the Legislature fails to act, the impacts are clear. People will be put out of work, prices will go up and family-owned small businesses will close.”

Steve LaLonde of LaLonde’s Market was joined in testimony by his son-in-law and the market’s current owner, Steve MacNellis. LaLonde said that for the first time in his career, he fears the 67-year-old family-owned business will not survive.

“This is not crying wolf. This is real,” LaLonde said, quoted in the GOP release. “We have projected that these changes will add $95,000 to our expense lines. We have weathered the storm of COVID and yearly inflation and we see no more room for future increases on retail prices of groceries (to make up costs).”

People are worried and frustrated as the issue came to a stalemate during lame-duck session. Protests have grown louder over the past several months with continued Democrat inaction in Lansing.

Schuette and House Republicans have prioritized solutions to the Court’s decision, and it’s time for lawmakers to act, Schuette said.

“House Republicans are delivering solutions on this issue,” Schuette said. “I am hopeful the Senate and the governor will join us in getting these reforms across the finish line in the coming weeks before a single job is lost due to these damaging mandates.”