Senate Majority Leader Winnie Brinks (D-Grand Rapids) and Senate Majority Floor Leader Sam Singh (D-East Lansing) discuss their efforts on a bipartisan deal to curb incoming minimum wage and paid sic leave changes Thursday. (Kyle Davidson/Michigan Advance)

LANSING — Facing a tight midnight deadline, the Michigan Legislature negotiated late into the night on Thursday, as members sought to finalize a deal on a pair of policies trimming back changes to the state’s minimum wage and paid sick time policies set to take effect the following day.

At the beginning of the year, the Republican-led House and Democratic-led Senate each offered their own proposals for retaining the state’s tipped wage and modifying new sick time requirements; they ultimately reached a deal with Senate Bill 8 and House Bill 4002, clearing several hurdles which could have prevented either policy from becoming law.

Although both bills were presented to Democratic Gov. Gretchen Whitmer with the expectation of a signature, House Bill 4002, which dealt with earned sick time, was not presented to the governor until 1:30 a.m. Friday, after the midnight deadline. How that will impact the legislation is unclear.

Without action from the Legislature, the minimum wage would increase to $12.48 on Friday, gradually rising to $14.97 by 2028 and phasing out the tipped wage by 2030. Employers with fewer than 10 employees would be required to offer up to 40 hours of paid sick leave and 32 hours of unpaid leave accrued over the year, while businesses with 10 or more employees must offer 72 hours of paid sick leave a year.

The new rules came down through a mandate from the Michigan Supreme Court in July 2024. In its ruling, the Court determined that members of the Republican-led Legislature in 2018 acted unconstitutionally by taking up two ballot proposals — one to raise the minimum wage and eliminate the lower-than-minimum tipped wage rate and another setting new paid sick leave requirements for employers — and stripping out key components from each initiative through amendments.

Servers and business owners have railed against the court-ordered changes, with representatives of the restaurant and hospitality industry warning the new policies would shutter one in five restaurants and prompt layoffs for 40,000-60,000 restaurant jobs.

However, Democrats and Republicans were able to meet in the middle on Senate Bill 8, as members of the House voted to send the bill back to the Senate on Wednesday.

The proposal, put forth by State Sen. Kevin Hertel (D-St. Clair Shores), would raise the state minimum wage to $15 by 2027 and increase the tipped minimum wage from 38% to 50% by 2031 rather than phasing it out.

However the policy had to survive a nail-biter of a vote in order to take immediate effect.

Of the 37 members in the chamber, 25 votes were needed in order to grant the bill immediate effect. With only 20 Senators voting in favor of the bill when it moved out of the Senate last Thursday, its fate seemed uncertain, though 26 Senators ultimately voted in favor of granting the bill immediate effect.

Among those supporting immediate effect were Sens. Sarah Anthony (D-Lansing), Jon Bumstead (R-North Muskegon), John Cherry (D-Flint) and Mallory McMorrow (D-Royal Oak) who previously voted against the effort, and Sens. Kevin Daley (R-Lum), Ed McBroom (R-Vulcan) and Rick Outman (R-Six Lakes) who were excused during last week’s vote.

After granting Senate Bill 8 immediate effect, members of the Senate also needed to reach a deal on the House’s proposed changes to the Earned Sick Time Act, House Bill 4002. The bills are tie-barred together meaning both policies must pass for either to take effect.

While the initial version of House Bill 4002 would have excluded businesses with fewer than 50 employees from the new sick leave requirements, the Senate’s own sick leave proposal would have allowed businesses with fewer than 25 employees to offer 40 hours of sick leave and 32 hours of unpaid leave, rather than 72 hours of paid sick leave.

The final version of House Bill 4002 requires businesses to provide employees with 1 hour of paid earned sick time for every 30 hours worked. However, small businesses — defined as employers with 10 or fewer employees — would have the option to provide their employees with 40 hours of paid sick time at the beginning of the year instead, and would not be subject to the law until Oct. 1.

New businesses who have yet to hire an employee before House Bill 4002 takes effect would also be exempt from the new law for three years after hiring their first employee.

Employers with more than 10 employees are also allowed to provide their employees with 72 hours of paid earned sick time at the beginning of the year for immediate use.

Employers with part time employees can also provide those employees with their time off at the beginning of the year, provided they notify those employees how many hours they are expected to work in a year and offer time off equal to what they would accrue if they worked all of the hours expected of them. If they go over that requirement, they will accrue additional sick time.

Small businesses must allow their employees to carry over at least 40 hours of sick time from one year to the next, while businesses with more than 10 employees must allow them to carry over 72 hours.

While businesses can also allow their employees to carry over more sick time, if they offer a higher limit, employers who offer their workers paid time off at the beginning of the year are not required to allow them to carry their sick time over to the next year.

The bill also eliminates language allowing employees to bring a civil suit against their employer for violations of the law, and allows employers to take action against employees who use their sick time for a reason not approved by the law or for failing to give proper notice.

Employees can use paid sick time to address their physical or mental health needs or the needs of a family member, for meetings at a child’s school or a place of care tied to a child’s health, disability or the effects of domestic violence or sexual assault on the child if the child is a family member.

Survivors of domestic violence or sexual assault and family members caring for them can also used their sick time to obtain medical care, psychological care, victims services, legal services, to relocate due to domestic violence or to participate in any legal services.

It can also be used if the employees workplace is closed due to a public health emergency, to care for a child or family member whose school or workplace is closed due to a public health emergency, or if health authorities or a health provider has determined the employee or one of their family member’s presence would risk exposing others to an infectious disease.