The Michigan Supreme Court ruled today that the Republican Legislature illegally blocked two ballot proposals in 2018, paving the way for a minimum wage hike and new paid leave requirements.

The 4-3 ruling increases the minimum wage and enacts a new paid sick leave that Michigan businesses say will destroy jobs.

“In sum, by adopting the Wage Act and the Earned Sick Time Act and then later stripping those acts of their key features in the same legislative session, the Legislature unconstitutionally violated the people’s initiative rights,” Justice Elizabeth Welch wrote. “Accordingly, we hold that the Amended Wage Act and the Amended Earned Sick Time Act are unconstitutional."

The change will take effect Feb. 21, 2025, with a revised schedule to account for inflation.

The schedule for the minimum hourly wage and tip credit is as follows:

• Feb. 21, 2025: $10 hourly minimum wage plus the inflation adjustment. The tip credit will be 48% of the minimum wage.
• Feb. 21, 2026: $10.65 hourly minimum wage plus inflation adjustment. The tip credit will be 60% of the minimum wage.
• Feb. 21, 2027: $11.35 hourly minimum wage plus inflation adjustment. The tip credit will be 70% of the minimum wage.
• Feb. 21, 2028: $12 hourly minimum wage plus inflation adjustment. The tip credit will be 80% of the minimum wage.
• Feb. 21, 2029: The state treasurer shall calculate the inflation-adjusted minimum wage. The tip credit will no longer exist.

The ruling will harm job providers and workers, said Wendy Block, senior vice president of business advocacy for the Michigan Chamber of Commerce.

“It’s difficult to imagine how our state’s restaurants and hospitality establishments will absorb this large of an increase in their labor costs or how employers will make the required sweeping and costly changes to their leave policies without drastically cutting back elsewhere,” Block said.

The Legislature should act before the laws activate, said House Republican Leader Matt Hall, R-Richland Township.

“Restaurants and other small businesses will have to raise their prices, tipped workers will take home less pay, and some people will lose their jobs,” Hall said in a statement.

The new rule will have an “absolutely devastating effect” on small businesses, said Brian Calley, president and CEO of the Small Business Association of Michigan.

“A lack of legislative intervention would communicate a clear message to those in Michigan and those looking to come here: Michigan is not open for small business,” Calley said in a statement.

A recent Michigan Restaurant and Lodging Association survey estimated that two-thirds of restaurant operators would lay off employees if the tipped wage were eliminated, 94% of operators would raise prices, and one in five full-service restaurants would close permanently.

This ruling could eliminate up to 60,000 jobs, MRLA President and CEO Justin Winslow said in a statement.

“As our recent industry operations survey illustrated, 40% of full-service restaurants in Michigan are already unprofitable, meaning this decision is likely to force more than one in five of them to close permanently, eliminating up to 60,000 jobs along the way,” Winslow said.

About 40% of Michigan restaurants could go bankrupt as this ruling takes effect, Rep. Noah Arbit, D-West Bloomfield, posted on social media:

“40% of restaurants across Michigan could go out of business when the tip credit skyrockets,” Arbit wrote. “Thousands of servers will be laid off. I look forward to working w/ colleagues and partners on a fix that will not leave our beloved community restaurants on a cliff-edge this winter.”

Eight faith-based organizations will receive portions of the $700 million of district pork projects in the 2025 Michigan budget. Taken together, these groups will receive $9.1 million in taxpayer funds. Most district pork projects were introduced in the budget in the last few hours of the budget process.

The faith organizations include family services, churches, outreach centers and housing agencies. The largest award is for what the budget calls a “Faith-Based Affordable Housing Grant” of $2.5 million to an organization in Grand Rapids. There is no other information about which entity will receive the housing grant money or how it will be spent.

Seven organizations will receive the balance of $6.6 million:

• St. Mark’s Episcopal Community Outreach Center, Grand Rapids: $1.5 million
• Jewish Family Services of Washtenaw County: $1.2 million
• First Presbyterian Church, Lansing: $500,000
• St. Luke Community Center, Flint: $3 million
• Faith Foundation Resources, Flint: $300,000
• Washington Heights United Methodist Church and Community, Battle Creek: $50,000
• Kingdom Builders Worldwide, Battle Creek: $50,000.

Kingdom Builders is the only organization that responded to a request for comment. The money will be used for various building improvements, including an elevator and a fire suppression system, according to Tino Smith, CEO of the organization.

“The funding will help us continue to provide essential services and create a more inclusive and safe space,” Smith told Michigan Capitol Confidential.

The organization has a long history of serving the Battle Creek community through programs that improve residents’ quality of life, Smith said. Kingdom Builders Worldwide offers senior activities, driver education, open recreational boxing, food distribution, and emergency shelter services during inclement weather.

Gov. Gretchen Whitmer might have line-item vetoed any of these earmarks. Whitmer’s office has not responded to a request for the full veto list.