Last week, the Michigan Supreme Court ruled that the state legislature’s use of an ‘Adopt and Amend’ strategy on a 2018 wage hike ballot measure was unconstitutional. As a result, the Court reinstated the original measure with timing adjustments, which will trigger an increase in the regular minimum wage to $12 per hour in January 2025, and up to $15 by 2028. The measure will also eliminate the tip credit by 2029.
The measure, backed by anti-tip credit activist group One Fair Wage, has plenty of opponents in Michigan — including restaurants and their tipped employees. Lawmakers on both sides of the aisle are calling for legislative action, citing concerns about adverse effects on the restaurant industry.
In the Detroit News this week, EPI’s Michael Saltsman and Rebekah Paxton discuss the origins of the tip credit elimination idea through One Fair Wage (OFW), and how the group abandoned its own attempts to run a restaurant using this model they push for other restaurants. Read an excerpt below:
Lawmakers were right to be wary of OFW’s misguided measure — the group’s attempts to implement similar policies within its own workplaces have failed.
OFW was born out of the Restaurant Opportunities Center (ROC), which became an activist organization determined to eliminate the tipping system — regardless of what actual tipped workers want.
Prior to its ballot measure woes in Michigan, ROC set out to create a model for the industry at its New York City Colors restaurant. Employees sued the group for having them work for “sweat equity” (unpaid work for the promise of future partial ownership). The restaurant was plagued by health code violations, and allegedly unable to pay staff on time. In 2020, Colors shut down for good.
Since then, ROC has been sued by former employees for discrimination, and OFW has received a campaign finance complaint from the Michigan Bureau of Elections and a U.S. House Oversight Committee probe into its lobbying activities as a tax-exempt nonprofit.
Yet OFW continues to push its harmful policies across the country, even where restaurants and employees oppose it.
OFW’s model failed because the economics don’t work for restaurants or employees.
Find the full op-ed here.