State Rep. Matthew Bierlein today voted to advance legislation that protects workers and Michigan’s small business community.

The advancement of House Bills 4001-02 comes as Bierlein and other members of the Select Committee on Protecting Michigan Employees and Small Businesses listened to stories and urgent concerns this week regarding the dire consequences of a Michigan Supreme Court ruling last summer.

“This is the top issue I hear about from people I represent, and that’s been common for many legislators the past few months,” Bierlein said. “Small businesses and their hardworking employees are the backbone of our local economies. The hours of testimony that we have had only further reinforce that the Court’s ruling would have a devastating impact on a crucial part of our communities. It’s time for action to ensure that we have a better way forward in Michigan.”

The decision, which goes into effect on Feb. 21, puts unrealistic mandates on small businesses regarding wages and sick leave while phasing out the tip credit, which provides a key source of income for workers and in often cases is more than an employee would make with an increased minimum wage – notably in the service industry.

“(With the tip credit), I have the flexibility to make as much as the person in front of me has the heart to tip,” said Christina Reynolds, a server at Bavarian Inn in Frankenmuth with over 30 years of experience in the service industry, when testifying before the select committee on Tuesday. “It’s really the beauty of the design right now. Let’s put our heads together and be creative to help one group of people that’s asking for help without causing so much harm to another group, because (the court’s decision) would.”

“Losing the tip credit would have devastating effects on our business, our guests and our team members,” Bavarian Inn general manager Amy Zehnder Grossi said in testimony. “Elimination of the tip credit equates to an over $1 million increase in server payroll. We can’t just absorb that cost. We would be out of business in just over a year. We will be forced to raise our prices significantly, which we know will deter visitors – especially families who love to experience the charm of Frankenmuth. Additionally, we would likely have to reduce team member hours or even cut jobs.”

Marc Owczarzak, who owns O’s Pub and Grill in Auburn within Bierlein’s House District, offered detailed and passionate testimony that echoed many of the sentiments that were shared by other business owners and noted that workers, consumer experience and the “people” part of operating a local business would be drastically impacted.

“Serving is a life skill. … Servers consistently work hard to deliver service in order to control the amount of income they make,” Owczarzak said. “If (the court mandates) were to go through, what does small business look like? People get replaced by technology. People walk into a restaurant to a service counter and order and one person carries out their food because it’s going to be really difficult to continue to employ the people that we employ in the restaurant industry with (the court ruling being effective).”

HBs 4001-02 strike a needed balance between economic growth, protecting livelihoods and keeping Michigan’s vital small business sector from shutting its doors en masse. The plans leave the current 38% tip credit, move toward a higher minimum wage year over year and tweak an impractical, court-ordered, one-size-fits-all earned sick leave approach that applies to businesses that employ even one person. In its place, the bills define an employer as an entity with 50 or more workers and don’t subject businesses with less than that to the requirements.

The legislation also lets employees carry over more than 72 hours of unused sick time to an ensuing year if an employer permits, giving added flexibility for workers.

Bierlein and House Republicans have prioritized solutions to the court’s decision after House Democrats did not take up any legislation on the issue to close out the 2023-24 term.

One survey conducted following the Supreme Court’s decision disclosed that two-thirds of Michigan restaurant operators would need to lay off staff if the mandates are implemented. Additionally, 94% of businesses anticipated significant price hikes for consumers, and one in five full-service restaurants said they could close permanently.

The bills now move to the full House for consideration.

PHOTO INFORMATION: State Rep. Matthew Bierlein, of Vassar, asks a question during testimony at a Select Committee on Protecting Michigan Employees and Small Businesses hearing on Tuesday, Jan. 14. The committee heard from numerous workers and job providers regarding a Michigan Supreme Court ruling set to be effective in February.