On September 18, 2024, at the request of the State of Michigan and its attorney general, the Michigan Supreme Court clarified issues relating to future minimum wage rates and minimum cash wage rates for tip-credit employees stemming from an earlier opinion. Specifically, the court had issued an opinion on July 31, 2024, in which it found unconstitutional legislative amendments that had significantly revised minimum wage, tip, and paid sick leave standards. The decision, however, left employers with some questions.

In its September order, the court first acknowledged that, when it discussed establishing future rates in its July opinion, it meant “minimum cash wage” instead of “tip credit.” Second, in describing the schedule for phasing out the tip credit, it omitted a step in the process. Third, it confirmed that all future rate increases will occur on February 21 for 2026 and future years and not January 1 as the state proposed. Fourth and finally, it held that of the five potential ways state officials could interpret the court’s requirement that preset rates for 2025 through 2028 be adjusted for inflation – given they were originally supposed to represent rates in 2019 through 2022 – the state’s proposed approach was what the court had intended.

Accordingly, as a result, the minimum wage rate and schedule will be as follows, and, absent different approaches to rounding, the minimum cash wage and tip credits should be as follows. We expect the state labor department to soon confirm or clarify these rates on its minimum wage and overtime webpage.

Michigan employers now have a clearer picture of their minimum wage, minimum cash wage, and tip credit obligations in coming years. It remains possible that the state legislature and governor could step in to change these rates and when they will take effect. Some legislators have already proposed legislation that would amend minimum wage, tips, and overtime standards, along with paid sick leave requirements. Whether these proposals advance, or others are introduced, remains to be seen, so employers should monitor the situation and the state labor department’s website for future developments.