Michigan Supreme Court Ruling Could Threaten 20% of State’s Restaurants, Industry Professionals Warn

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GRAND RAPIDS, Mich. — A recent ruling by the Michigan Supreme Court could spell major changes for the state’s restaurant industry, with experts predicting that as many as 1 in 5 establishments might face closure. The ruling mandates the elimination of Michigan’s tip credit, replacing it with a flat minimum wage for servers and bartenders—a shift that has sparked significant concern among industry professionals.

On Thursday, servers and bartenders from across West Michigan gathered in Grand Rapids to voice their apprehensions to lawmakers. They argue that the ruling, set to take effect in February, could dramatically alter the industry, leading to higher prices for diners and potential layoffs for staff.

State Representative Patrick Outman (R-Six Lakes) echoed these concerns, reflecting on the cumulative toll of recent challenges: “The restaurant industry has been through enough. In terms of the COVID pandemic and the subsequent lockdowns, it’s just one thing after another.”

For individuals like Brittany Jones, a server at Uccello’s, the ruling represents a significant threat to their livelihood. Currently earning $3.80 per hour plus tips, Jones fears that the transition to a flat minimum wage will undermine her earnings and the culture of tipping that supports her. “It’s going to be a catastrophic change for everyone, including myself,” said Spencer Potter, Uccello’s General Manager, who anticipates that menu prices could rise by up to 50% to offset the increased labor costs.

The impact of the ruling extends beyond just employees. Restaurant operators may turn to automated kiosks and price hikes as they struggle to compensate for reduced staff and increased expenses. This shift could alter the dining experience for Michiganders, transforming the way restaurants operate and interact with their patrons.

John McNamara, Vice President of Government Affairs for the Michigan Restaurant and Lodging Association, emphasized the widespread discontent among industry workers. “The tip credit works; servers want the tip credit. They do not want just a flat wage. We heard a resounding message today: ‘If I wanted a minimum wage job, I’d go get one,’” McNamara stated.

In response to the ruling, the organization Save MI Tips is organizing a Capitol Day in Lansing on September 18. This event will provide servers and bartenders another opportunity to engage with lawmakers and advocate for a bill to protect the tip credit.

Jones, who worries about her family’s financial future, summed up the stakes: “I’ll have to find another job. I won’t be able to support my kids anymore working minimum wage; it’s just not doable.”