Michigan Minimum Wage Will Increase to $7.40

April 30th, 2008 Posted by Amelia

The economy in Michigan isn’t at its best, and the jobless rate is quite high. Several companies have moved plants to neighboring states where the minimum wage is lower, such as Indiana with a minimum of $5.85 per hour.

On July 24, 2008, the Indiana minimum will go up to $6.55, and will still be less than Michigan’s minimum on that date of $7.40.

The minimum wage in Michigan has increased from $5.15 per hour in 2005 to $6.95 in 2006, to $7.15 in 2007. On July 1, 2008, another 25 cents per hour will be added the Michigan minimum wage, bringing it to $7.40.

Governor Jennifer Granholm has been the champion of these increases, but some people are wondering about the timing of the increases. With so many people losing their jobs, critics fear increasing the minimum wage may worsen the situation.

Another consideration relates to the U. S. Department of Labor regulation that any employee covered by both state and federal minimum wage is entitled to the one which provides greater benefit. In Michigan, the state minimum is 85 cents higher than the federal minimum so practically every worker is entitled to the state minimum wage.

The Michigan Minimum Wage Law covers every company that employs 2 or more workers over 16 years old. Workers who put in more than 40 hours per week are eligible to be paid overtime, which is 1.5 times the employee’s regular hourly rate.

Though the minimum wage for regular workers will increase, the minimum for tipped workers will not. The current minimum is $2.65 per hour. After July 1, 2008, workers who earn tips of at least $4.75 per hour may be paid the tipped rate. Employees who earn less that $4.75 per hour must be paid a high enough rate so that tips and wages combined equal the federal minimum wage.

With these changes to the minimum wage rates, all employers must bring their labor law posters up to date.

Michigan Comp Time

One unique feature of Michigan minimum wage law will remain unchanged. Every Michigan employer with 2 or more workers over the age of 16 is covered under the Michigan Minimum Wage Law of 1964. This law permits these employers to grant workers comp time, in some cases, instead of paying overtime wages.

Michigan is one of the few states that grants compensatory time (paid leave at a future date), instead of overtime. The FLSA (Fair Labor Standards Act of 1938) prohibits comp time, however, except for non-profit organizations. Therefore, any Michigan employer that is covered under FLSA may not grant comp time to its employees.

Eligibility details are outlined in MCL 408.384a (8) of the Michigan Compiled Laws.

Michigan employers not covered by FLSA may grant comp time, but only if the worker presents a request for it in writing. The Michigan Department of Labor and Economic Development states that coercing, intimidating, or making comp time a condition of a worker’s employment is prohibited.

If an employer wants to cancel a comp time program, it must provide employees with at least 2 months notice.

To be eligible to receive comp time, an employee must receive 10 days paid leave each year. If a worker doesn’t receive 10 days of paid leave, the company must pay the worker overtime wages.

Employees can accrue comp time up to 240 hours. When a worker leaves the job, he or she must receive payment for any unused comp time.

When an employee puts in a request to use comp time, the company must comply. There is an exception to this rule. If the worker’s absence would cause too great a disruption, the employer is within its rights to deny the request. All comp time must be paid at the employee’s wage when the time was earned.

Comp time is earned at the same rate as overtime pay. For every hour worked over 40 hours in week, the employee gets 1.5 hours of comp time. For example, John works 45 hours one week and elects to take comp time. His 5 hours of overtime earn him 7.5 hours of paid time off.

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Posted in Employment Laws, Michigan, Wage and Hour

  1. Posted by: Vikki Hains

    I currently make $7.50, working at K Mart Stores. I am part-time and have been there for one year. Is K Mart obligated to raise my wage accordingly?

  2. Posted by: Amelia

    Hi Vikki!
    The employer is obligated to pay you at least the minimum wage. Your current rate of $7.50 per hour is more than the new minimum wage of $7.40 per hour, so the employer is not obligated to give you an increase. Increases in the minimum wage only affect people who are being paid the minimum wage. When an employer gives a 25 cent increase to minimum wage workers, they are not required to give a corresponding raise to other employees — and the overwhelming majority will not. For complete answers to all your HR questions, post them on our free forum at http://www.laborlawtalk.com. And, thanks for reading the blog! Amelia

  3. Posted by: micael

    Is it ok for an employer to screw you around on hours such as one week only getting 10 hours and the next working 39 nine hour but no more than forty because it would cost them more to have another full time employee. And if I work over forty hours are they allowed to only pay me for forty on that check and then try to pay the rest at regular rate on the next check so they arent paying time and a half?

  4. Posted by: Amelia

    Hi Micael! The answers to your questions are yes, and no.

    Yes, an employer can schedule you for a different number of hours each week, even 10 one week and 39 the next. Ideally, the employer would have told you upfront that the number of hours would vary. But in many businesses, to be successful, the employer has to schedule people when there is work for them to do.

    No, the employer cannot avoid paying overtime in this way. It’s a violation of both the federal and Michigan overtime laws to do so. When you work more than 40 hours in the week, you must be paid overtime at 1.5 times your usual rate. If for some reason the extra hours are not on this weeks paycheck, and are paid on the next check, they must still be at the overtime rate. Discuss this with your employer once. If the problem is not immediately corrected, contact the Michigan Department of Labor and Economic Growth. They will collect the overtime for you.

    For more info, post your questions on our sister site at http://www.laborlawtalk.com. HTH, and thanks for reading the blogs!~ Amelia

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