On February 21, 2025, Governor Gretchen Whitmer signed legislation that preserves Michigan’s tip credit and scales back an increase to the state’s minimum wage. On Wednesday, February 19, 2025, just days before this legislation and the new Earned Sick Time Act (ESTA) were set to take effect, amendments to the minimum wage law received final approval from both the House and Senate. As a result, Governor Whitmer signed both pieces of legislation into law. For more information about changes to ESTA, see Varnum’s advisory here.
Under the amendments to the minimum wage law, the new minimum hourly wage rate is:
Hourly Rate | Effective Date |
|---|---|
$12.48 | February 21, 2025 |
$13.73 | January 1, 2026 |
$15.00 | January 1, 2027 |
The new minimum hourly wage rate for tipped employees is:
Hourly Wage Rate | Effective Date |
|---|---|
38% of the minimum hourly wage rate | February 21, 2025 |
40% of the minimum hourly wage rate | January 1, 2026 |
42% of the minimum hourly wage rate | January 1, 2027 |
44% of the minimum hourly wage rate | January 1, 2028 |
46% of the minimum hourly wage rate | January 1, 2029 |
48% of the minimum hourly wage rate | January 1, 2030 |
50% of the minimum hourly wage rate | January 1, 2031 |
The bill also stipulates that beginning in October 2027, the state’s minimum wage must increase based on the rate of inflation. The state treasurer will calculate the increase by multiplying the otherwise applicable minimum wage by the 12-month percentage increase, if any, in the Consumer Price Index for the Midwest region, CPI-U or a successor index as published by the Bureau of Labor Statistics.
Additionally, the bill transfers oversight from the Department of Licensing and Regulatory Affairs to the Department of Labor and Economic Opportunity. It also subjects employers to a civil fine of no more than $2,500 for failing to pay the minimum hourly wage to employees who receive gratuities in the course of their employment.
Contact your Varnum labor and employment attorney for guidance on compliance with either of these laws.