May 1. 2025
What’s new: The Senate Labor Committee heard testimony Thursday, including from the MI Chamber, on broad and sweeping legislation to severely limit the ability of employers to use independent contractors, require so-called “wage transparency” and impose draconian penalties for wage and hour violations, which could result in business leaders being thrown in prison for upwards of 20 years.
Why it matters: While the Michigan Chamber isn’t condoning efforts by fly-by-night entities to misclassify or underpay workers, we believe Senate Bills 6 and 7 create more problems than they solve. Misclassification and “wage theft” are illegal today and will continue to be regardless of whether this legislative package is passed and signed into law. The Senate proposal would limit the ability of good-acting employers to use independent contractors by putting into place a California-style “ABC Test” – limiting the ability of virtually ALL employers to use independent contractors.
Other issues with the bill include:
- The so-call “wage transparency” provisions. SB 6 would require employers to provide employees with three years of wage information for “similarly situated employees” upon request – putting employers in the difficult spot of having to justify wage differentials based on merit pay, resume gaps, education levels, and more.
- Penalties. SB 6 would drastically increase the penalties for violations of Michigan’s wage and fringe benefit laws, including misclassifying workers, and could even result in years-long prison sentences for business leaders. We are encouraging Senators to rethink their approach and instead focus on strong civil enforcement and public awareness of the state’s wage and fringe benefit laws.
One thing to note: California, which adopted their ABC test for independent contractors in 2019, now exempts over 109 types of workers as well as business-to-business relationships. Additional exemptions are under consideration and are dragging out what has already been a prolonged, unnecessary and messy process. Additionally, these exemptions have not solved the issue and instead created a system of winners and losers. Some of CA’s exemptions include most outside salespeople; insurance underwriters, auditors, and risk managers; medical professionals; other licensed professions (e.g., lawyers, engineers, accountants); investment advisers; grant writers; graphic designers; freelance writers; real estate professionals; most bona-fide business-to-business relationships; and more.
What happens next: The Committee is expected to have another hearing on the bills in the coming weeks and has signaled they may tailor the bills to “construction.” Exactly what this means is unknown – but the Senate body doesn’t seem interested in changing the penalty or wage transparency provisions.
What we’re doing: The MI Chamber has organized a statewide coalition to fight back against this dangerous proposal. Read the coalition leave behind.
Go deeper: Read our full analysis of the bill or contact Wendy Block for more information.