Last night, One Fair Wage announced it will seek a voter referendum to reinstate Michigan’s tip credit elimination law.
The referendum seeks to overrule the Michigan Legislature’s bipartisan decision to halt a law that would have completely eliminated the tip credit for the state’s servers and bartenders, following testimony from those same workers who opposed tip credit elimination. As a result, compromise legislation held the tip credit to 50% of the statewide minimum wage.
Below is a quote from EPI’s research director, Rebekah Paxton, on the issue:
“Michigan’s tipped workers have been clear from the start: They don’t want their tipping system to change. Servers and bartenders fought tooth and nail to protect the tip credit and their livelihoods. Reversing workers’ wishes will only subject them to slashed earnings, lost jobs, and closed restaurants.”
Background:
- In 2018, the Michigan legislature adopted a proposed ballot measure to raise the state’s minimum wage to $12 per hour by 2022, and eliminate the tip credit by 2024. The legislature then voted to push out the target date for the minimum wage hike up to $12.05 by 2030, and protect a tip credit equal to 38% of the regular minimum wage.
- In 2021, activist groups challenged the constitutionality of the legislature’s ‘Adopt and Amend’ policy, which was upheld by the Michigan Court of Claims and later by the Michigan Supreme Court. The Supreme Court issued a ruling that would require the wages be brought to about $15 per hour by 2028 with full tip credit elimination by 2029 and adjusted for inflation thereafter.
- Worker-led organizations like Save MI Tips rallied against the wage hikes, pushing the legislature to act to preserve the tip credit before the Feb. 21st deadline.
- The Michigan House acted first, passing a bill in late January that preserved the tip-credit and pushed completion of the wage hike from 2028 to 2029.
- In February 2025, Michigan’s Governor signed a legislature-passed bill that would cap the tipped wage increase at 50% of the regular minimum wage.
- A similar tip credit elimination policy currently underway in Washington, D.C. has gutted the city’s restaurant industry: thousands of jobs have been lost, restaurants are closing at the highest rate since the pandemic, and workers reported at a recent City Council hearing on the issue that their earnings have been slashed in half. The devastation has been so clear that the Mayor is asking for a repeal, and the City Council voted to pause additional wage hikes due to the law.