All Hands on Deck: How the MRLA is Working to Keep the Industry From Keeling Over
By: John McNamara, MRLA VP of Government Affairs | October 2024
After a legal tug-of-war that spanned six years and three separate state court rulings, Michigan’s hospitality industry once again finds itself at a critical juncture. This July, a Michigan Supreme Court decisively invalidated a legislative procedure commonly referred to as “adopt and amend,” which was used in 2018 to reform a ballot initiative, and thereby ordered a key set of laws to be reinstalled.
The end result: minimum wage increases are now tied to the consumer price index, employees are facing supremely expanded mandatory paid sick leave guidelines, and the tip credit is headed to elimination.
The end result: minimum wage increases are now tied to the consumer price index, employees are facing supremely expanded mandatory paid sick leave guidelines, and the tip credit is headed to elimination.
State leaders are still seeking clarity from the high court about how these changes should be implemented, but if nothing changes, increases in minimum wage and mandated paid sick leave will go into effect next year on February 21. What is most devastating to many of the small businesses the MRLA represents, from Houghton to Port Huron and every map-dot in between, may be the loss of the tip credit, which will dramatically change the way businesses operate and pay workers.
We know this ruling will trigger an avalanche of negative effects for your business and our industry. In fact, there is significant data that lays out the possible effects in no uncertain terms:
We know this ruling will trigger an avalanche of negative effects for your business and our industry. In fact, there is significant data that lays out the possible effects in no uncertain terms:
A June survey of operators revealed the following data:
- If the tip credit is lost in Michigan one in five full-service restaurants will close.
- Between 40,000 and 60,000 jobs will be lost
- Those that survive would expect to raise prices by 25%
- 83 percent of servers prefer the status quo to changes proposed by the court
- 79% of servers fear for their jobs if the tip credit is lost
- Almost 45% of respondents are likely to cut down on tips as a result of the ruling
- 41% oppose the elimination of the tip credit, with 14% saying they were unsure
While this unfortunate ruling seemed sudden, the MRLA was by no means unprepared: for years, Michigan Restaurant and Lodging Association has been working on a legislative solution - even before the 102nd Legislature held its first day of session. We’re not even close to giving up.
Right now, the MRLA is working tirelessly with legislative leaders, senior staff members and the governor’s office on amendments to protect the tip credit, raise the minimum wage in a responsible manner and smooth the edges on a paid sick leave law. Also, in the days following the Michigan Supreme Court ruling, the MRLA has been raising large-scale awareness of the possible side effects of eliminating the tip credit by amplifying messages on social media, creating social media kits for businesses to use to advocate on their own behalf, collecting letters from business owners to elected officials, getting the public involved by distributing table tent kits across the state, and giving members a platform through Save MI Restaurants.
In August and September, the MRLA also co-hosted roundtables with Save MI Tips, a worker-led organization driven by restaurant servers and bartenders passionate about keeping their tips. These roundtables were held in cities all over the state, including Traverse City, Grand Rapids, Detroit, and Lansing, and brought together the restaurant community and elected officials. Owners, operators and their staff met face-to-face with state lawmakers and described, in their own words, how they would be negatively impacted by the loss of a tip credit. At these roundtables, the message was loud and clear: the effects of the court ruling would be devastating to an industry that is still recovering from a catastrophic shutdown during the COVID-19 pandemic and the impact of a legislative solution would be lifesaving for the industry and its workers.
Right now, the MRLA is working tirelessly with legislative leaders, senior staff members and the governor’s office on amendments to protect the tip credit, raise the minimum wage in a responsible manner and smooth the edges on a paid sick leave law. Also, in the days following the Michigan Supreme Court ruling, the MRLA has been raising large-scale awareness of the possible side effects of eliminating the tip credit by amplifying messages on social media, creating social media kits for businesses to use to advocate on their own behalf, collecting letters from business owners to elected officials, getting the public involved by distributing table tent kits across the state, and giving members a platform through Save MI Restaurants.
In August and September, the MRLA also co-hosted roundtables with Save MI Tips, a worker-led organization driven by restaurant servers and bartenders passionate about keeping their tips. These roundtables were held in cities all over the state, including Traverse City, Grand Rapids, Detroit, and Lansing, and brought together the restaurant community and elected officials. Owners, operators and their staff met face-to-face with state lawmakers and described, in their own words, how they would be negatively impacted by the loss of a tip credit. At these roundtables, the message was loud and clear: the effects of the court ruling would be devastating to an industry that is still recovering from a catastrophic shutdown during the COVID-19 pandemic and the impact of a legislative solution would be lifesaving for the industry and its workers.
Every day, the MRLA hears people who want to invest in their communities or expand their entrepreneurial ventures but are now waiting to see what happens. Countless servers are on edge, concerned about the flexible jobs that allow them to support their families. Those who were considering a career in hospitality are now facing an uncertain landscape
This is all to say, the MRLA knows how scary and stressful the next few months will be. Every day, the MRLA hears people who want to invest in their communities or expand their entrepreneurial ventures but are now waiting to see what happens. Countless servers are on edge, concerned about the flexible jobs that allow them to support their families. Those who were considering a career in hospitality are now facing an uncertain landscape.
As the recognized leader for this powerhouse industry, which employs about 500 ,000 Michiganders and generates nearly $40 billion state revenue, the MRLA has been committed to advocating on behalf of the industry for over 100 years. Protecting your business and your employees is one of the foundational reasons the association exists, and the MRLA will always strive to create solutions that allow your business to not only succeed but to flourish, grow, and serve your community with outstanding hospitality.
As the recognized leader for this powerhouse industry, which employs about 500 ,000 Michiganders and generates nearly $40 billion state revenue, the MRLA has been committed to advocating on behalf of the industry for over 100 years. Protecting your business and your employees is one of the foundational reasons the association exists, and the MRLA will always strive to create solutions that allow your business to not only succeed but to flourish, grow, and serve your community with outstanding hospitality.
Looking to get involved in the work to Save MI Restaurants? There are several one-step days to speak up and make a difference. Find out at www.savemirestaurants.com
