Michigan Supreme Court Minimum Wage Ruling: Rates, Tips, and Sick Time

Michigan’s minimum wage is $13.73 per hour as of January 1, 2026, and it is scheduled to rise to $15.00 per hour on January 1, 2027.¹ Tipped workers have a separate, lower base wage that is phasing up on its own schedule. Both rates come out of a 2024 Michigan Supreme Court decision that restored a 2018 voter-initiated wage law, followed by 2025 legislative amendments that locked in the specific dollar amounts and slowed the tip credit phase-out.

The Current Wage Schedule

Here is the schedule set by the court ruling and the 2025 amendments:

February 21, 2025: $12.48 per hour
January 1, 2026: $13.73 per hour
January 1, 2027: $15.00 per hour

Starting in October 2027, the State Treasurer calculates annual adjustments using the Consumer Price Index for the Midwest Region. Each new rate takes effect the following January 1, and the Treasurer publishes it by November 1 of the preceding year.²

One safety valve: if Michigan’s unemployment rate reaches 8.5% or higher in the year before a scheduled CPI increase, that year’s adjustment does not take effect.² The 2026 and 2027 dollar amounts were set by statute, so the CPI formula does not kick in until after the $15.00 rate is in place.

Tipped Minimum Wage

Michigan still allows a tip credit, meaning tipped employees have a lower guaranteed base wage, with tips expected to bring their total pay up to the full minimum. The 2025 amendments (Senate Bill 8) replaced the original voter-initiated schedule, which would have eliminated the tip credit entirely by 2030, with a slower phase-up and a permanent 50% ceiling:

2025: 38% of the minimum wage
2026: 40%
2027: 42%
2028: 44%
2029: 46%
2030: 48%
Ongoing after 2030: capped at 50%

For 2026, that puts the tipped base wage at approximately $5.49 per hour (40% of $13.73).¹ The tip credit is not being eliminated under current Michigan law; tipped workers will eventually receive half the general minimum wage as their guaranteed base, with tips covering the rest.

An employer claiming the tip credit must still make sure each employee’s combined pay (base wage plus tips) meets or exceeds the full minimum wage for every hour worked. If tips fall short, the employer owes the difference. That make-whole obligation becomes more significant as the gap between the tipped base and the full minimum wage changes year to year.

Why the Rate Changed

In 2018, petition organizers collected enough signatures to place a minimum wage initiative (the Improved Workforce Opportunity Wage Act) and an earned sick time initiative before the Michigan Legislature. The legislature adopted both proposals and then, in the same session, passed amendments that cut back the wage increases and replaced the sick time law with a weaker version.

In 2024, the Michigan Supreme Court decided Mothering Justice v. Attorney General and held that the adopt-and-amend maneuver violated the state constitution’s initiative provision.³ The court struck down the 2018 weakening amendments and set an effective date of February 21, 2025 for the restored original laws, giving the State Treasurer time to calculate inflation adjustments and giving employers time to prepare.⁴

Before the restored laws fully took hold, the legislature passed Senate Bill 8 and House Bill 4002 in 2025, and Governor Whitmer signed both. Those bills kept the higher wages and broader sick time but adjusted certain provisions, most notably the tipped wage schedule. Because the 2025 amendments came in a new legislative session after the voter-initiated laws had already taken effect, they stand on different constitutional footing than the 2018 maneuver.

Earned Sick Time Rights

The same court decision restored the Michigan Earned Sick Time Act, which took effect on February 21, 2025 for most employers. Small businesses had until October 1, 2025 to comply.⁵ Workers earn one hour of paid sick time for every 30 hours worked.⁶

Annual usage caps depend on employer size:

Employers with 11 or more employees: up to 72 hours of paid sick time per year.
Small businesses (10 or fewer employees): up to 40 hours per year.

The employee count includes full-time, part-time, and temporary workers, including those placed through staffing agencies. Once an employer has 11 or more employees for 20 or more workweeks in the current or prior calendar year, it is no longer a small business for this purpose.⁵

Employers can frontload the full annual amount at the start of each year (72 or 40 hours) instead of tracking accrual hour by hour. Part-time employees can receive a prorated frontloaded amount based on expected hours, but the employer must provide additional time if the worker ends up exceeding those projections. Under the accrual method, unused sick time carries over up to 72 hours (or 40 for small businesses), though the annual usage cap still limits how much can actually be taken in a given year. Employers who frontload the full amount are not required to allow carryover.⁶

New hires begin accruing sick time immediately, but employers can require a 120-day waiting period before the employee uses any of it. Accrual continues during that period, so the employee has a bank of time available when the waiting period ends.⁶

Qualifying uses are broad. They cover an employee’s own illness, injury, medical appointments, and preventive care; the same needs for a family member; medical, legal, counseling, relocation, and court-related needs tied to domestic violence or sexual assault affecting the employee or a family member; meetings at a child’s school or daycare about the child’s health, disability, or the effects of domestic violence; and public health emergencies, including workplace or school closures ordered by public officials and quarantine situations.⁷

Enforcement and Retaliation

An employer that fails to provide required sick time faces a $1,000 administrative fine, plus a potential civil fine of up to eight times the employee’s normal hourly wage. Willfully ignoring the mandatory workplace posting requirement carries a $100 fine per violation. The Michigan Department of Labor and Economic Opportunity can also order payment of improperly withheld sick time, back pay, and reinstatement for workers who lost their jobs over sick time disputes.⁵

Retaliation is prohibited under both state and federal law. Firing, demoting, cutting hours, or reassigning someone to less desirable work because they used sick time or filed a complaint can trigger a state labor department investigation or a civil claim.

What Employers Should Do Now

Payroll systems should reflect $13.73 per hour as the general minimum and the current 40% tipped rate (roughly $5.49) for 2026. Employee handbooks should spell out the sick time accrual rate, the annual usage cap for the employer’s size, carryover rules, qualifying uses, and any 120-day waiting period for new hires.

Updated workplace posters covering the current minimum wage and sick time rights are required, and the posting penalty is separate from any underlying violation. Employers using the tip credit should audit each pay period to confirm that tipped employees’ total compensation reaches at least $13.73 per hour, and build the annual tipped percentage increases into labor cost projections through at least 2030. The next general minimum wage increase, to $15.00, takes effect January 1, 2027, after which CPI-based adjustments begin.²

1
Michigan Department of Labor and Economic Opportunity. Minimum Wage and Overtime
2
Michigan Legislature. Michigan Compiled Laws 408.934
3
Justia Law. Mothering Justice v Attorney General (2024)
4
Michigan Courts. Mothering Justice v Attorney General – Order
5
Michigan Department of Labor and Economic Opportunity. Earned Sick Time Act – Frequently Asked Questions
6
Michigan Legislature. Michigan Compiled Laws 408.963 – Earned Sick Time Act
7
Michigan Legislature. Michigan Compiled Laws 408.964 – Earned Sick Time Act