SBAM’s Advocacy team is grateful to all of the small business owners who chose to engage in the legislative process over the last two years. We are confident that member calls to action and individual reach outs were heard and considered by members of the legislature as they debated various policy positions that would have affected the small business landscape in Michigan. Throughout lame duck, the business community faced an unprecedented slew of anti-business policy proposals that each had significant momentum and powerful backers; nearly all of them failed. Thank you for your help, and for speaking up for yourselves.  Your voice continues to be the most important and impactful to policymakers.

Despite the best efforts of the business community, House and Senate leadership chose not to address the much-needed implementation changes to the Earned Sick Time Act or the tipped wage during this session. Despite extensive discussion and bipartisan support, the two issues became roped into wider policy discussions and deals that eventually broke down and failed.

As result, new earned sick time requirements will go into effect on February 21^st, 2025. Additionally, starting that day, the minimum wage will be increased to $12.48 per hour and the tipped minimum wage will increase from 38% of the total minimum wage to 48% of the minimum wage ($5.99 per hour). SBAM is developing resources to assist small businesses as they update their employee handbooks to comply with the new Earned Sick Time Act, which will be available soon.

As we enter 2025, SBAM’s advocacy team will continue to advocate for commonsense implementation changes to the Earned Sick Time Act and for a restoration of the tip credit. 

Before negotiations began on many Lame Duck issues, the House and Senate made it a priority to pass increases to unemployment insurance benefits. These increases exceeded even what had been previously discussed but moved quickly through the House and Senate. Changes include an escalation of maximum benefit weeks from 20 to 26, and an expansion in the maximum benefit amount from $362 to $614 per week, implemented over the next two years. This legislation has been presented to the Governor, and we expect that she will sign it, and these changes will soon become law.

The last time the weekly unemployment benefits exceeded $600 during the pandemic, the labor force participation fell and took until 2024 to fully recover. In addition to that, a recent Senate Fiscal Analysis indicated that this increase is estimated to add $635.6 million in annual costs to employers, which will be covered in the form of increased unemployment assessments. The Unemployment Trust Fund has not yet fully recovered from misuse and fraud during the pandemic and the agency is still in the early stages of modernizing the system to protect it from fraud and abuse. 

Michigan is one of the few states in the country that does not currently have a research and development incentive. If administered correctly, an R&D tax credit can help foster innovation across sectors of the economy in a way that is accessible and available to smaller employers. The R&D Tax Credit package that was discussed this year certainly did not fit that mold when it was first introduced, but after the sponsors of the bill engaged stakeholder feedback, they changed the bill to be industry-agnostic and for the credit to be administered through the Department of Treasury, rather than as a grant-like program through another agency. These changes were welcomed by SBAM and others.

Although the bill passed both chambers, the policy still faced difficulties in its path to becoming law, as it was included in larger economic development conversations that largely crumbled under their own weight. The bill required one last concurrence vote before advancing from the legislature, and its final approval seemed unlikely as the year came to a close. Miraculously, in a 29-hour session to close out the legislative year, the Senate approved the most recent changes to the bill, and it now heads to the Governor’s desk for her signature.

As the end of the legislature’s term neared, many unfortunate policy proposals came back from the dead and threatened to haunt the business community. All of the bills listed below saw movement in the committee process or were passed through either the House or the Senate. Each of these bills were seriously considered for passage and would have created significant problems for Michigan’s small business owners. All of them failed.

HB 6217 – Corporate Income Tax Increase: For decades Michigan had one of the most complex and uncompetitive business tax systems in the world. Since 2011, Michigan has had a simple and competitive corporate tax code. The legislature considered increasing the corporate income tax as a road funding mechanism, but the deal eventually fell through, and the increase was not considered further.

SB 332-333; SB 4574-4575 – Paid Family Leave Mandate: A mandate that would require all employers to facilitate a new 12–15-week paid family leave program gained momentum in the final days of this legislature and even made it out of committee in the Senate. SBAM issued a call to action on this issue and encouraged Senators to oppose this costly new mandate, which was estimated at a whopping $16-$17.2 billion dollars per year, according to the Senate’s nonpartisan Fiscal Agency. Luckily, the Senate did not take up this package for a vote.

SB 1079-1080 – Workers’ Compensation System Overhaul: Badly needed reforms to the  Workers’ Compensation system in 2011 took Michigan from being one of the most expensive states to one of the most competitive and effective states, and decreased premiums by 45%. Suggested reforms to the system would have reverted our system back to 2011 and would have gone further, by expanding the definition of disability, eliminating distinction between disability, gutting work search requirements, and allowing claims all the way back to 1985 to be filed. Similar to the paid family leave mandate, this bill also made its way out of committee but failed to pass the Senate.

HB 4402-4406 – Wage Transparency Requirements and Increased Penalties: This package of bills would have drastically increased penalties for wage and fringe benefit violations and even would have forced employers to reveal wage information and historical data to employees. These bills were referred to by the House committee and even were on the agenda for passage, but once House members were informed of the bills’ contents and the adverse effects they would bring to small businesses in their community, they lost momentum.

HB 6218 / SB 1173 and HB 4237 / SB 171 – Local Preemption Repeal: This costly legislation would have added extraordinary regulatory complexity to Michigan’s business landscape by allowing the state’s 1,800+ local units of government to create their own laws concerning wages and employee benefits. A more tailored version of this bill that deals only with locally funded projects was voted out of the Senate but never appeared before the full House for a vote.

SB 1021-1022 – Consumer Protection Act Expansion: This legislation would have subjected more than 80 industries, many of which are dominated by small businesses, to increased litigation and double regulation through expansion of the Michigan Consumer Protection Act. Each of these industries are already subject to state licensing and oversight that carries authority to fine or even close businesses who engage in unlawful practices. These bills would have benefited trial lawyers more than actual consumers. Although the bills passed the Senate, they never appeared before the full House for a vote.

HB 5895-5897 (SB 954-956) – Price Controls in Declared Emergency: This well-meaning legislation would have put the state in a price setting position, subjecting small business owners to potential criminal penalties for relatively small increases (10%) to their prices in a declared state of emergency. The industries targeted by this legislation operate on very small margins and the threat of criminal prosecution when increasing prices is an unreasonable regulation given how little control small businesses retailers have over commodity prices. While versions of this bill passed both the House and the Senate, technical rules prevented either individual package from passing both, meaning neither can be presented to the Governor. 

HB 5618-5627 – Pay Equity Bills: This bill package contained a litany of burdensome new requirements concerning pay transparency and nonequal pay between specified employees. These bills would have taken core HR decisions out of the hands of small businesses, while creating a high bar for compliance that would have subjected many small businesses to costly lawsuits. While the package passed the House Labor committee and neared a vote in the House, the House was unable to gather a quorum as the bills were being considered, and the bills were not passed.

SB 659; SB 888-892 – Data Privacy and Data Breach Mandates: These bills would have introduced new requirements for businesses that handle personal data online, and for businesses that are targeted in a data breach. In a time when more business is done online, it is more important than ever before that lawmakers do not pursue policies that put small businesses at a regulatory disadvantage to competitors in other states and countries, which these bills would have done. Both sets of bills passed the Senate, but never received a vote before the full House.

SB 605-611 – Brownfield Cleanup Overhaul: This package of bills, referred to as “Polluter Pay” by its supporters, would have introduced drastic cleanup standards that would have put a halt to brownfield redevelopment and site cleanup in Michigan. Michigan already has a polluter pay law that requires the party responsible for pollution to manage cleanup. This bill package would have forced the buyers of orphaned sites and previously polluted sites to engage in strict cleanup to a residential standard, even for nonresidential sites. The package passed the Seante but did not receive a vote before the full House.