Governor Signs Minimum Wage Increase to Avoid Ballot Proposal; Legal Battle Likely

June 3, 2014

In an effort to ward off a dangerous ballot proposal to increase Michigan’s minimum wage to $10.10 per hour, the Legislature has passed, and the Governor has signed, legislation to increase Michigan’s minimum wage to $9.25 per hour. However, the question of whether this issue will be on the November ballot is far from settled, as the group aiming to put this issue before voters in November turned in over 300,000 petition signatures late on May 28, meaning the courts will likely debate whether the question can legally be on the ballot.
 
Senate Bill 934, which was signed by Gov. Snyder in late afternoon on May 27, increases the state’s minimum wage from $7.40 per hour to $8.15 per hour on September 1, 2014; $8.50 per hour on January 1, 2016; $8.90 per hour on January 1, 2017; and $9.25 per hour on January 1, 2018.
 
Beginning in April 2019, the minimum wage rate will be adjusted annually to reflect the five-year average change in the Midwest Region Consumer Price Index (CPI) but increases cannot exceed 3.5 percent in any given year. However, inflationary increases cannot take effect if Michigan’s unemployment rate, determined by the US Bureau of Labor Statistics, is 8.5 percent or greater for the year preceding the prescribed increase.
 
Beginning September 1, 2014, the minimum hourly wage for tipped employees will increase from $2.65 per hour to a hourly wage rate of 38% of the minimum hourly wage rate, meaning the wage will adjust each year the regular minimum wage rate adjusts. If an employee’s tips plus the tipped minimum wage rate does not equal or exceed the (regular) minimum wage rate, the employer must pay any shortfall to the employee.
 
The Michigan Chamber strongly opposed the bill as passed by the Senate due to the decision by the bill sponsor, Senate Majority Leader Randy Richardville (R-Monroe), to tie the minimum wage to Detroit’s Consumer Price Index (CPI), increase the minimum wage twice in four months, and link the issue to transportation funding.
 
Speaker Bolger (R-Marshall) and House Republicans deserve credit for their effective leadership on this issue and for making the best of a bad situation, given the Senate-passed bill and looming ballot proposal. The House listened to the Michigan Chamber’s concerns and made significant improvements to the bill as passed by the Senate. Specifically, while indexing remains in the legislation, the House lessened the negative impact of this costly provision by successfully pushing for a more reasonable index with hard cap and freezing increases in years with high unemployment. Furthermore, the House stripped the Senate provision which called for two increases in four months and replaced it with a more affordable schedule of increases over a longer time period.
 
While the Legislature was hopeful that the legislation would cause proponents of the $10.10 minimum wage ballot proposal to withhold their signatures, it did not. The Raise Michigan Coalition turned in over 300,000 signatures on May 28 in the hopes to putting the issue on the November ballot. The next step will be for the Secretary of State (SOS) to proceed with a canvass of the signatures to determine if the coalition has at least 258,088 valid signatures. This will likely happen in July.
 
If the SOS deems that the coalition has enough signatures, this issue will likely go to the courts. The Legislature passed a full repeal of the current minimum wage statute, meaning the ballot proposal seeks to amend a law that no longer exists. The courts will need to decide whether to allow the issue on the November ballot. This is untested territory but an argument can be made that their petitions do not comply with the constitutional requirements to put an issue on the ballot because the statute the proponents seek to amend has been changed.
 
The Michigan Chamber will keep you up-to-date on any developments.  Please contact Wendy Block with any questions at (517) 371-7678.