New minimum wage and paid sick leave laws set to become effective in 37 days could raise the cost of eating out in Michigan by 25% or more. But the state House is considering legislation that could head off the worst effects of the new regulations.

Two bills introduced on Jan. 9 aim to reform incoming paid leave rules and the phaseout of the tipped wage credit, both of which became active after a July Michigan Supreme Court ruling.

House bills 4001 and 4002, introduced by Reps. Jay Deboyer, R-Clay Township, and Rep. John Roth, R-Interlochen, would modify new laws that, as of Feb. 21, will require paid time off for all employees and minimum wage for tipped wage workers.

The 2024 decision by the state’s high court followed years of lawmaking, and the resulting laws, which have become a hot potato for both parties. Taken together, the new laws could increase restaurant costs by a quarter or more, according to a restaurant industry survey.

“We’ve heard from countless hardworking small business owners and their dedicated employees about what this ruling would mean for them,” DeBoyer said in a news release. “It would be a catastrophe. Many small businesses would close, their employees would be out of work, and the places that remain open would have to significantly raise their prices on people who go out and support businesses in their community, which will lead to an even bigger fight to stay open.”

Under the new law, employees will accrue one hour of paid sick leave for every 30 hours worked. Employers must let workers use up to 72 hours of sick time per year, which can be rolled over into the next year.

If the current law stands, an employee could be a “no-call no-show” worker for up to three days without being fired, Roth told Michigan Capitol Confidential in a phone interview.

Roth used Michigan’s ski resorts as an example. They hire up to 500 seasonal employees during ski season. All employees, including seasonal and part-time, will now have paid time off. If one of the seasonal workers decides not to show up for two days, the employer cannot fire the employee and is still required to pay time off.

Multiple businesses fear the February law change, Michigan Capitol Confidential has reported.

Other states and cities that enacted paid leave found negative effects, Rebekah Paxton, director of research at the Virginia-based Employment Policies Institute told CapCon in an email.

“Evidence from Connecticut and other cities that have tried mandating paid leave found negative impacts on businesses and slashed hours and income for their employees,” Paxton wrote. “Combined with the state Supreme Court’s decision to reinstate a measure to eliminate the tip credit, is a ‘one-two punch’ for Michigan's businesses and workers,” she wrote.

Paxton and Michael LaFaive, senior director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, analyzed the consequences of the Supreme Court ruling in a June blog post.

The change will take effect Feb. 21, 2025, with a revised schedule to account for inflation that will phase out the tipped credit by 2029 and raise the hourly minimum wage to nearly $15 an hour.

The new Republican bill, however,suggests a graduated minimum wage schedule starting at $12 an hour on Feb. 21, 2025, and ending at $15 an hour by 2029. The plan would restore the tipped wage.

The bills would only apply the time-off requirement to employers with 50 or more employees. It would also remove the three-day “no-call no-show” allowance.

During last month’s lame-duck session, the fight over restoring the tipped wage and paid sick leave escalated until Republicans refused to attend because the Democratic trifecta that controlled the Legislature and the governor’s office wouldn’t address the issue.

Senate Majority Leader Winnie Brinks, D-Grand Raids, did not respond to an email seeking comment.

Landlords sued the city of Flint twice in 2024 after red tape wrangled residential and commercial tenants into a catch-22. The landlords want the city to turn on the water, but first, they need a city rental inspection.

They can’t get the rental inspection unless the water is turned on, according to three landlords interviewed by Michigan Capitol Confidential.

There are 15,000 rental units in the city of Flint. But only 1,200, or 8% of the total, have been granted rental certificates, according to information CapCon received through an open records request.

The city has three inspectors to grant the certificates, according to the record request, meaning each inspector is responsible for reviewing 5,000 rentals over a three-year period.

The city will place water service under the landlord’s name, but if the tenant doesn’t pay the bill, the city places a lien on the property. The city won’t give a water affidavit — a document that places the water bill in the tenant’s name — to the tenant until that person acquiesces to a city inspection.

Emily Doerr, Flint’s director of planning and development, wrote a December 2023 letter to the Flint City Council, explaining the inspection process. Landlords, Doerr wrote, must pay a one-time rental registration fee of $250 and then a rental inspection fee of $225 to ensure that their property complies with the 2021 International Property Maintenance Code. Both the state of Michigan and the city of Flint rely on the code.

The city’s rental inspection program applies to tenants, who make up almost 50% of Flint’s residents, according to Doerr.

Landlords can get water turned on for tenants if it’s kept in the landlord’s name, Doerr told CapCon in a phone interview. If a tenant doesn’t pay the water bill, either the city or the landlord gets stuck with the bill.

“That’s not my problem. They [landlords] aren’t entitled to having the water in their tenant’s name,” Doerr told CapCon. “They are the property owner.”

“The only way we’ll turn the water on in the tenant’s name is if it’s a licensed rental,” Doerr said, adding that the license means the city knows that the property is safe and up to code.

The city has added three additional rental inspectors in the last year and a half so it can usually schedule a rental inspection within 10 business days, Doerr said.

“We’re not backed up,” Doerr said. “They [landlords] just don’t want to get a rental inspection,” Doerr said.

The city charges $225 to cover the costs of sending inspectors back for multiple trips because many rentals aren’t up to code and require extra trips.

“Nobody passes the first inspection because the rental inspection inspection program has been on hiatus for so many years because of the lawsuit,” Doerr said.

“My job is to say to a tenant in the city, ‘Yes, we are trying to make sure you have an apartment to rent that is safe,’” Doerr said.

Rental inspections help the landlords if there is an eviction, Doerr said, because some judges will toss eviction orders for rental properties that aren’t registered with the city.

In 2017, landlord Karter Landon challenged the rental inspection ordinance and got it thrown out by a federal district judge. His suit claimed that the ordinance violated his Fourth Amendment right to be free from warrantless searches, arbitrary and retaliatory fines, and civil and criminal charges.

The city created another ordinance in 2020, according to a letter from the city of Flint. In September 2020, the city enacted Ordinance 200304, which amended Section 24-4 of the Flint Code of Ordinances with a new rental inspection code.

The new ordinance requires that all rental properties be registered with the city and certified as complying with the code after being inspected. The ordinance requires that water service be placed in the name of the property owner unless the city’s customer service department receives a water affidavit, a copy of a lease and an application for water service. The application requires that rental properties be registered and certified by the Building Safety and Inspection Division.

“If all three of the documents above are not provided, City ordinance requires that the Customer Service Department place water service only in the name of the property owner to ensure that the water bills will be paid,” Doerr’s letter to the city council said. “The City is also prohibited from providing free water service under state law.”

A 2024 lawsuit filed by the Genesee Landlord Association led to a court order that the “City of Flint must allow water affidavits to be processed when there (is) both a signed lease and a valid water affidavit.” The Nov. 14, 2024, court order was issued by Genesee County Circuit Court Judge Celeste D. Bell. “The City of Flint shall transfer the water accounts into the tenant’s name ... obtain consent from the lessee, or obtain a warrant to inspect the property within 60 days,” it read.

Flint Township, a neighboring municipality, is much more lenient, Ed Constable, a Genesee County landlord and the president of the Genesee Landlord Association, told CapCon in a phone interview.

In Durand, 20 miles away from Flint, a city inspection costs $55. In Flint, an inspection costs $225, or 4 times more.

“Rental inspection isn’t supposed to be a profit center for the city,” Constable told CapCon. “It’s supposed to be there to cover the cost of the operation of fulfilling rental inspections.”

Bobbie Kirby, a Flint landlord and the executive director of the landlord group, said she paid for an inspection in 2021 that never happened.

“If there are 15,000 rentals and they only have three inspectors, how are they going to inspect them? They just want their money,” Kirby said in a phone interview.

Henry Tannenbaum has managed rental properties in the Flint area since the 1980s. Since that time, he says, the housing stock in Flint has gotten worse.

“We have many tenants living in this city without water because of the bureaucracy of the city of Flint,” Tannenbaum said in a phone interview.

Landlords would pay the inspection fee, but the city wouldn’t turn on the water, Tannenbaum said. He’s a board member of the same landlord association.

“You can’t do the inspection fee without the water,” Tannenbaum said.