Supreme Court to rule soon on case about minimum wage for tipped workers

By OWEN MCCARTHY
Capital News Service 

LANSING — The income of bartenders and servers — whose minimum wage is set at $3.93 to account for the tips they receive — largely hinges on how many customers come in on a given night, and what mood they’re in. 

A state Supreme Court ruling expected soon could change that.

The case focuses on a 2018 ballot initiative that would have phased out the minimum wage for tipped workers completely by 2024 so all workers — whether they receive tips or not — would have the same minimum wage. 

The ballot initiative would have also raised the general minimum wage to $12 by 2022.

But that initiative never appeared on the ballot. 

Instead, lawmakers used a strategy called “amend-and-adopt” to dilute the proposal by lessening the minimum wage increases and eliminating the uniform minimum wage regardless of tips. 

Mothering Justice, the Detroit-based advocacy group that led the campaign for the ballot initiative, has sued the state, arguing it was unconstitutional for the Senate and House, both of which were then controlled by Republicans, to adopt the initiative and amend it in the same legislative session.

“If the power to adopt and amend is placed in the hands of the Legislature, they’ll use that to eviscerate the right of initiative,” Mark Brewer, the group’s lawyer, argued to the Supreme Court in December. 

“Why would anyone undertake an initiative knowing that a hostile Legislature could simply adopt and then gut their proposals?” Brewer told the court.

The Supreme Court decision will apply statewide. However, the impact on tipped workers in resort and vacation communities that already have trouble filling seasonal jobs in the restaurant and hospitality industries may be especially noticeable.

Brian Calley, the president of the Small Business Association of Michigan, said he hopes the court rules the Legislature was within its constitutional bounds in using the amend-and-adopt tactic.

If it doesn’t, he said, the lower minimum wage for tipped workers will go away, and “virtually overnight, the cost structure of restaurants and bars will change.”

Calley said the already-rising meal costs brought on by inflation will be exacerbated if restaurant owners have to pay servers and bartenders higher wages that don’t account for tips.

Calley said he believes servers and bartenders might earn less if the minimum wage for tipped workers is eliminated because meal costs will be driven up and customers will leave less generous tips. 

“That also makes going out to eat less attainable for more people,” Calley said. 

Calley’s organization opposes government intervention in wage and price setting.

“We think that more sustainable and ultimately better outcomes come from people making decisions that suit themselves,” Calley said. “And people will make rational, personal economic decisions, and equilibriums will be found and set.”

John Sellek, a publicist for the advocacy group Save MI Tips, said a survey by the Michigan Restaurant & Lodging Association found that 83% of bartenders and servers wanted the system to remain as is. 

Sellek said his organization held press conferences in the days leading up to the recent arguments in the Supreme Court to amplify the voices of tipped workers who want to preserve the current system.

He said they believe customers will tip less if their minimum wage is raised. Besides, he said, tipped workers often earn well above minimum wage in the current system.

“They feel their customers know the system is special,” Sellek said. “They’re holding the servers or bartenders to a higher standard of service, and when they deliver that kind of service, then they’re getting rewarded for it.”

Danielle Atkinson, the founding director of Mothering Justice, argues a uniform minimum wage regardless of tips would give more security to workers.

“Maybe somebody’s making really great one night, but then one night, they’re making horrible,” Atkinson said. “Sometimes it balances out and sometimes it doesn’t.”

“Could you imagine any other profession, like a doctor, saying ‘I’m really hoping I make good tips today?’” Atkinson said. 

“You provide a service, and you should be able to be guaranteed that if I go to work, I’m going to make enough that I can meet my bills and have some predictability around what I make,” she said.

Atkinson said a uniform minimum wage regardless of tips would put the “power back in the hands of workers” and protect them from employers who are “bad actors.”

She also said a uniform minimum wage regardless of tips would reduce income disparities in the restaurant industry between white employees and people of color.

“We see a great difference when it comes to race in wages because of mentalities about tips,” Atkinson said. 

Seven states currently have a uniform minimum wage regardless of tips for all workers: Alaska, California, Minnesota, Montana, Nevada, Oregon and Washington. 

According to NBC News, four other states are considering ballot measures that would do the same.

Atkinson described the Legislature’s adopt-and-amend strategy as a “slap in the face of democracy” that gutted her group’s original proposal. 

She said she is hopeful the Supreme Court will rule in favor of her group. 

In 2022, a Court of Claims judge found the adopt-and-amend strategy unconstitutional. In early 2023, the Court of Appeals reversed that ruling. 

Atkinson said her group expects a decision in late spring. 

It is unclear exactly what will happen if the court rules in favor of her group because there is no precedent, she said. 

However, she said “the remedy should be going back to the law that was passed by the Legislature before they gutted it.”