In Mothering Justice v AG,¹ the Michigan Supreme Court addressed whether an adopt-and-amend strategy by the state Legislature can be used to prevent citizens’ initiatives from reaching the ballot. The strategy had been used to prevent initiatives from reaching the ballot in 2018. Those initiatives sought to increase the state minimum wage and eliminate tip credits for employers and to expand earned sick time for Michigan workers. The Court held that the strategy violated the Michigan Constitution, art. II, § 9, but the Court delayed implementation of the original enacted statutes due to perceived hardships, and, in part, seemed to suggest that a legislative solution might be sought in the interim. The impending implementation of the original statutes spurred the amendments found in Public Acts 1 and 2 of 2025.

After receiving the Governor’s approval on February 21, Michigan’s increased minimum wage law was enacted as Public Act 1 of 2025. Expanded paid sick leave was approved on the same day and was enacted as Public Act 2 of 2025. Both laws were given immediate effect.

Public Act 1 of 2025 amends Michigan’s minimum wage law — the Improved Workforce Opportunity Wage Act²—to increase the state’s minimum wage. Notable changes include a schedule of annual increases in the hourly wage rate for two years before it then becomes tied to changes in the rate of inflation. The Act also increases the wage rate paid by employers taking the tip credit for workers who receive gratuities and affects changes to the rate of overtime pay received by workers who are paid at Michigan’s minimum wage rate.

As of February 21, 2025, the minimum wage for hourly workers has increased from $10.56 to $12.48.³ The new rate will increase yearly until reaching $15 per hour on January 1, 2027.⁴ Thereafter, the state treasurer is tasked with annually calculating an adjusted minimum wage.⁵ Each year, the treasurer will adjust the minimum wage by multiplying the then-current wage rate by any increase in the Consumer Price Index for the Midwest region during the prior 12 months.⁶ The calculations are made in October, published in November, and take effect on the first day of the following January.⁷ The treasurer’s adjusted minimum wage increases do not take effect if Michigan’s unemployment rate, as determined by the U.S. Department of Labor’s Bureau of Labor Statistics, for the preceding year is 8.5% or greater.⁸

The tip credit changes gradually increase the minimum cash wage (i.e., “tipped minimum wage”) that employers must pay their employees who regularly and customarily receive tips (i.e., “gratuities”). Employers who take the tip credit are required to ensure that their employees receive a rate of pay equal to or greater than the minimum wage rate.⁹ For such employees, the minimum wage they are paid is composed of a minimum cash wage that their employer pays and the tips that the employee receives from customers. The combined amount must meet or exceed the minimum wage rate. If it does not, the employer is required to make up any shortfall. Before the recent amendments, employers were required to pay tipped employees a minimum cash wage equal to 38% of the applicable minimum wage.¹⁰

Public Act 1’s amendments establish a schedule for increases to the minimum cash wage for tipped employees. The schedule provides for yearly increases to the percentage of the applicable minimum wage that must be paid to tipped workers.¹¹ In 2026, the percentage will increase to 40% of the applicable minimum wage that must be paid as the minimum cash wage.¹² In 2027, the percentage will increase to 42%, with yearly increases thereafter until reaching a cap of 60% in 2035.¹³

Efforts to change conditions for minimum wage workers have been debated in the Michigan Supreme Court, ballot initiatives, and in the Michigan Legislature. Public Acts 1 and 2 of 2025 give minimum wage workers an answer as to what's next.

The amendments provide that management and supervisors cannot receive any portion of an employee’s tips and cannot share in employee tip pools.¹⁴ Additionally, tips are the property of the employee and are required to be paid to the employee regardless of whether the employer takes a tip credit for the worker.¹⁵ Employers must provide written notice to both customers and employees of the employers’ plan for the distribution of any customer service charges.¹⁶

The final notable changes brought by Public Act 1 relate to overtime pay for hourly workers. Both federal and state law require overtime pay at one and a half times an employee’s regular rate of pay.¹⁷ A notable exception to this general rule applied to workers who were covered by both federal and state law and who were paid at Michigan’s higher minimum wage rate. Before the amendments, overtime pay to such workers was only required at one and a half times the federal minimum wage rate and not at the workers’ regular hourly rate — the Michigan minimum wage rate. The amendments eliminated this exemption, and all hourly workers, including those being paid at the Michigan minimum wage rate, must now receive pay at one and a half times their regular hourly rate.¹⁸

Except for a brief window during COVID-19,¹⁹ federal law has never provided for employees to receive paid sick leave.²⁰ Michigan’s Earned Sick Time Act²¹ is thus the primary instrument requiring paid sick leave to employees.

Public Act 2’s amendments expand the rights of Michigan workers to receive paid time off due to their illness and for the illness of family members. Some key changes include expanding the scope of employees covered, altering coverage between large and small employers, revising the accrual method for paid sick time, frontloading of paid sick time as an alternative to accrual, a new hire waiting period, and reducing enforcement options when rights under the Act may have been violated.²²

The amendments differentiate between small and large businesses and provide differing requirements for each. Small businesses are defined as employers with 10 or fewer employees.²³ All employees are counted toward the threshold, regardless of whether they work full time or part time and regardless of whether the employees are working through a staffing agency.²⁴ An employer is not a small business if it had more than 10 employees on its payroll during 20 or more workweeks in either the current or preceding calendar year.²⁵

Under Public Act 2, employees of small businesses accrue paid sick leave at a minimum of one hour of paid sick leave for every 30 hours worked.²⁶ The amendments delay implementation for small employers until October 1 of this year.²⁷ Employees of a small business can use up to 40 hours of paid earned sick time each year²⁸ and can carry over up to 40 hours of unused accrued sick time.²⁹ As an alternative to the accrual method, employers of small businesses may provide their employees with 40 or more hours of paid sick time at the beginning of the year.³⁰ This is known as frontloading and, if provided, employers are not required to carry over unused sick time from year to year.³¹

Employees of large businesses also accrue paid sick leave at a minimum rate of 1 hour for every 30 work hours.³² Large employers are required to begin accrual as of the effective date of Public Act 2. Employees of a large business can use up to 72 hours of paid earned sick time each year and can carry over up to 72 hours.³³ In place of the accrual method, large employers may also offer frontloading by providing employees with 72 or more hours of paid sick time at the outset of the year.³⁴ Again, if provided, employers are not required to carry over unused earned sick time from year to year.³⁵

Employees may begin using earned sick time as it accrues; however, employers may require new employees to wait 120 days until using accrued sick time.³⁶ Both small businesses and other employers can provide for accrual rates that exceed the stated minimums and can provide higher carry-over limits.

While most changes expand existing rights of employees, Public Act 2 enacts one notable change that contracts employee rights under the statute. The recent amendments eliminate employees’ ability to bring a civil action against their employer for violations of the Act’s requirements.³⁷ As a result of these changes, the statute now vests enforcement exclusively within complaint procedures established by Michigan’s Department of Labor and Economic Opportunity.³⁸

In closing, it should be noted that the amendments of Public Act 1 and 2 of 2025 more closely approximate the requirements of the citizens’ initiatives that prompted their enactment. However, the amendments continue to materially deviate from those initiatives in a number of areas. And while seemingly adopted in part at the suggestion of some justices on the Michigan Supreme Court in Mothering Justice v AG, it may remain to be determined just how far a legislative enactment can deviate from the provisions of a citizen’s initiative and still remain compliant with the requirements of Michigan Constitution at art. II, § 9, particularly when the initiative was never placed on the ballot and the enacted provisions of the initiative never became law.