GREENVILLE, Mich. — A pending ruling by the Michigan Court of Appeals could drastically alter the way tipped workers are paid in the state.
In 2018, voters approved a ballot measure, organized by the group One Fair Wage, that sought to raise Michigan’s minimum wage to $12 per hour by 2022, keeping tipped workers at 80% of that rate in 2022, 90% by 2023, and then the standard rate by 2024.
But in a last-minute amendment, the GOP-led legislature implemented lower rate thresholds over a longer period of time. Their amendments had the minimum wage rise to $12.05 by 2030 instead of 2022 and kept the tipped minimum wage at 38% of the standard wage., with tip money intended to make up the difference.
That brought Michigan’s standard minimum hourly wage to $10.10 per hour and $3.84 per hour for tipped employees as of January 1, 2022.
But the legislature’s actions drew immediate lawsuits and on July 19, 2022, the Michigan Court of Claims issued a decision finding the amendments unconstitutional, reverting the rates back to the original voter-approves amounts, plus cost-of-living adjustments.
The ruling meant wage rates for standard workers would go up to $13.03 per hour and $11.73 for tipped workers. But the issue for bars and restaurants is the timeline. The Court of Claims decision was appealed and the ruling was stayed in place until February 19th, when the Court of Appeals will decide on the case.
If the ruling is upheld, those new amounts would have to be implemented by businesses not over the course of years, but one day after the ruling – on February 20, 2023.
And some local spots say they weren’t even aware this court battle was going on.
“This proposal is something that I wasn’t aware of until recently,” said Barry Thornton, owner of the Winter Inn in Greenville. “Normally when they do things like this, they give you a notice and then you spread it out over a few years, and you can absorb it and work it through your system. But this is different.”
Winter Inn has been an historic fixture in Greenville for over a century, originally opening their doors in 1902. Thornton’s family has owned the restaurant and hotel since 1989 and he’s worked there since he was 15-years-old. On the walls, black and white photographs show the building in construction with Model-T Ford’s out front; an old local baseball team; an 1800s map of Greenville.
“It’s my life’s work,” said Thornton. “I’ve been doing this my whole life.”
Thornton says he doesn’t have a problem with paying his staff more, and gladly would if the crush of COVID-19 and inflation weren’t already bearing down on their books. And he says he certainly can’t absorb a wage increase of that magnitude in a month’s time.
“I’m going to have to raise prices again, which we just did. I don’t want to do that again,” he said.
“I mean, I can’t charge $40 for a hamburger. I can’t raise prices to match this increase and we can’t absorb it, and a lot of other restaurants can’t either. This will cost jobs.”
To compensate, Thornton and his staff are testing a serverless system where customers can scan a QR code and place orders from their phones and tablets. But he has concerns that older customers may not understand the system, and that their bottom line might call for layoffs anyways.
“The more I looked into it the more scared I got because it was a big number,” said Thornton. “Especially my restaurant when we have lots and lots of tipped wage earners here. It’s most of my staff.”
Thornton says, like a lot of restaurant owners he’s talked to since finding out about the pending decision, there’s not much else he can do but wait for a ruling.
“Wait and hope, yeah, that’s about all I can do,” he said. “I don’t think a lot of restaurants are going to be able to survive this honestly. If you’re teetering on the edge, you’re going to be probably closing your doors and I don’t think a lot of people understand that.”
