State Rep. Ken Borton on Wednesday issued the following statement after a Michigan Supreme Court ruling that will raise the minimum wage and eliminate the tip credit for servers, bartenders, and other workers who frequently make more with tips than they would with a higher minimum wage. The changes begin to take effect Feb. 21, 2025.

“Northern Michigan is filled with unique restaurants that people travel hundreds of miles to visit. Each of those locally owned operations is at risk of shutting down after this ruling,” said Borton, R-Gaylord. “These businesses rely on local people – from high school kids to adults who have worked in the service industry their entire lives – to stay afloat. These folks pride themselves in offering the best possible service and are rewarded through quality tipping. These extreme changes being pushed on us by the Supreme Court mean that most of these hard-working people will be laid off in the coming year. It’s unacceptable. The Legislature must return to work and save our restaurant and tourism industries.”

During the 2018 session, the Legislature adopted two citizen-initiated laws that increased the minimum wage and created a new paid sick leave rule. During the same legislative session, the Legislature then amended those laws to ensure they reflected the purpose of the initiatives and would not result in mass layoffs and shutdowns throughout Michigan small businesses. Later, a collection of progressive groups sued the state, arguing that the “adopt and amend” practice was unconstitutional.

A recent survey by the Michigan Restaurant and Lodging Association illustrates the dire consequences we’ll see if the radical changes in the 2018 proposals are allowed to stand:

• 66% of restaurant owners say they would be forced to lay off employees.
• 20% would be forced to shut their doors.
• 42% would be forced to cut operating hours.
• More than 92% of restaurants would be forced to hike prices, with many anticipating increases of 20% to 25% by early 2025.

Another survey found that 82% of Michigan restaurant servers wanted to keep the tipping system in place, and 79% worried about losing their job if the tip credit were eliminated.

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