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In This Issue

  • Housing Bills Clear Legislature, Head to Governor for Signature
  • Minimum Wage to Increase in 2023, Restaurant Workers Are Concerned
  • Corporate Transparency Act
  • Presidential Primary

Housing Bills Clear Legislature, Head to Governor for Signature

A bipartisan package of bills focused on workforce housing passed the Michigan State Senate this week and now heads to the Governor for approval. The package expands successful programs to allow residential builders, and non-profits to work with their local units of government to create workforce housing in their respective area.

The Lansing Regional Chamber is part of the Housing Michigan Coalition. Housing has become one of the top policy priority focus areas of the Chamber in 2022. We want to specifically thank the Grand Rapids Chamber, Home Builders Association of Michigan, Michigan Municipal League, and Housing North for leading the Housing Michigan coalition effort.

Minimum Wage To Increase in 2023, Restaurant Workers Are Concerned

Article by Gongwer News Service

Tammy Upchuch of Midland has worked as a server for 17 years, and although she’s only paid around $4 an hour, she doesn’t want Michigan to change the tipped minimum wage.

“Under the current system, I’m able to earn as much as $40 to $45 an hour. …Tips are what keeps everybody going that’s in the industry,” she said. “If that was to go away, it would literally destroy restaurants as well as the people that work in them.”

A Court of Claims ruling is set to end the lower tipped minimum wage next year by reinstating the original version of a 2018 minimum wage ballot proposal. If the ruling isn’t overturned, the state’s minimum wage will rise to $12 an hour and the tipped minimum wage would increase to $9.60 an hour. The change does not eliminate tipping, but some in the industry say the ruling will devastate Michigan’s restaurants.

In July, Court of Claims Judge Douglas Shapiro held that the “adopt-and-amend” strategy the Republican-led Legislature and Republican Governor Rick Snyder used to subvert two petitions – one to raise the minimum wage and another to require paid sick leave – violated the idea behind the constitutional provision allowing the Legislature to enact initiative petitions into statute instead of letting them go to the ballot.

The GOP-controlled Legislature in 2018 adopted the initiative petitions so they did not reach the ballot. Then after the election, they passed legislation gutting the provisions with a simple majority.

“I personally don’t think that my business would be able to run,” said Gabbie Huhn, a bartender in East Lansing. “We would all quit before we made $12 an hour.”

Michigan’s current tipped wage system is also used by 42 other states. It allows employers to pay 38 percent of the full hourly minimum wage to tipped employees with the guarantee the worker will recover the rest or more in tips. If tips don’t cover the gap, employers are supposed to cover the full hourly rate up to the minimum wage.

The fear among some servers is that by raising the minimum wage, customers will be less likely to tip or won’t tip as generously.

“It’s this mentality of, ‘If we’re making equal, then why would I tip you?'” said Ms. Huhn. “When they know I’m making less, much less, they tip me more. It’s just kind of human nature. … So as much as it would be great to say I wish that people were nice enough to do both, they’re not.”

If those tips are lost, the income levels of servers would decrease drastically, Ms. Huhn said, making it impossible for herself and others in the industry to support themselves.

“This is where I make my money. This is how I pay my rent. … Without that I wouldn’t be on track for grad school. I wouldn’t be able to graduate from college in three years,” she said. “I’d rather keep it how it is, and keep doing the things I’m doing, making the gains I’m making in other places in my life, but it’s supported by this industry.”

Ms. Huhn isn’t the only person in the industry who fears the effects of changing the status quo.

An online survey conducted on behalf of the Michigan Restaurant and Lodging Association found that one in six restaurants would close and between 40,000 and 60,000 restaurant jobs, mostly servers, would be lost. Additionally, the survey showed 83 percent of the 336 restaurant servers questioned prefer the current system, where they earn a far lower minimum wage and receive tips. The survey also showed 79 percent of servers fear for their jobs if the tip credit is eliminated (See Gongwer Michigan Report, November 21, 2022).

Saru Jayaraman, president of One Fair Wage, the organization that circulated the petition for the 2018 ballot proposal, said that the concerns of workers are rooted in misinformation.

“This is the same old campaign of misinformation that the restaurant association has led for decades,” she said. “We’ve done so many years of polling and surveying that shows not only that workers have overwhelmingly always wanted this, but at this point, are not even willing to work without it.”

More than 1 million workers have left the industry and 70 percent of them cite low wages as their reason for leaving, Ms. Jayaraman said. Many others are planning to leave the industry, and 80 percent of those who have left or are planning to leave the industry say that a full livable wage with tips on top is the only thing that would make them stay.

“Michigan doesn’t even have enough workers to currently staff the restaurants to allow them to be opened full-time right now, and in response, hundreds of Michigan restaurants have already … voluntarily raised their wages to $12, and $15 and $20.”

States that have already raised the minimum tipping wage – including California, Oregon, Washington, Nevada, Minnesota, Alaska and Montana – all have higher tipping average than Michigan does, Ms. Jayaraman said.

“Nobody tips based on knowing anything about or caring about how much workers make,” she said. “Tipping isn’t impacted based on whether workers earn a wage or not. What’s impacted is that those workers end up making more money.”

Ms. Jayaraman said the median wage for tipped workers in Michigan is around $10 including tips, and that those making more than that make up about 1 percent of the industry.

“All of this is really silly at this point because it’s way beyond lies and misinformation,” she said. “It’s flying in the face of the reality of the worst staffing crisis in the history of this industry…and it’s because workers have finally reached their breaking point during the pandemic. They’re not willing to work for a $3 wage anymore.”

The Court of Appeals will hold a hearing on the 2018 ballot initiative on December 13. Ms. Jayaraman said she was confident that the Court of Claims ruling would be upheld.

MLIVE – Fight to raise tipped minimum wage likely to spill into Michigan’s next legislative session

Corporate Transparency Act

Passed on January 1, 2021, the Corporate Transparency Act (“CTA”) is set to dramatically change reporting requirements for many small and medium-sized businesses. Unlike similar reporting laws, the CTA will mandate that qualifying businesses self-report information about the people who created, own, lead or have influence over them, as well as information about the business itself. All the information will be added to a federally managed database for law enforcement purposes.

Unless an exception applies, a “reporting company” under the CTA is any company which is: (i) created by the filing of a document with a secretary of state or a similar office under the law of a State or Indian Tribe or (ii) is a foreign company registered to do business in the US. The most common exemption to the CTA will likely be the “large business” exemption: a company with more than 20 full-time employees, a US physical office, and at least $5,000,000 in gross receipts on the prior year’s tax return.

For more information on the Corporate Transparency Act, Foster Swift will be conducting educational programs with LRCC in January and March of 2023. In the interim, if you have questions contact Robert Hamor at rhamor@fosterswift.com or visit https://www.fosterswift.com/f-corporate-transparency-act-resources.html

Presidential Primary

The Michigan State Senate has passed Senate Bill 1207 to revise the presidential primary election date for the State of Michigan. The move would change the presidential primary from March to February, which would make the State of Michigan a key state in the presidential primary process and attract attention from candidates from both parties. The bill now heads to the House of Representatives Elections and Ethics Committee for consideration.

The Lansing Regional Chamber signed onto a letter with several other business groups in support of moving up the presidential primary date. You can view the letter here.