In Illinois, the state minimum wage increased 25 cents from $7.50 to $7.75 per hour. This is the second step in a 3-tiered increase. The state minimum wage will increase again in 2009. The law applies to any employer with 4 or more workers who are not family members. More details here.
Michigan’s minimum wage also increased 25 cents per hour from $7.15 to $7.40. The state minimum wage has risen nearly $2.00 since 2005, despite sluggish job growth, problems for the automotive industry and the loss of a number of major employers. The law applies to employers with 2 or more workers. More details here.
All overtime and minimum wage laws are enforced by Michigan Wage and Hour Division of the Department of Labor and Economic Growth. The state minimum wage in has risen nearly two dollars since 2005, despite relatively high unemployment.
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.
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.
Governor Jennifer Granholm has been the force behind the minimum wage increases, bringing the rate from $5.15 per hour in 2005 to $7.40 as of July 2008. Unfortunately, the Michigan economy has lagged since 2004, and critics are concerned that these increases are making the problem worse.
Michigan’s jobless rate is still quite high, because several manufacturers have moved their plants to Indiana where the state minimum wage is $5.85 per hour. Even when the Indiana minimum wage goes up on July 24, 2008, to $6.55, Michigan’s minimum will still be 85 cents per hour higher.
In addition, a major car manufacturer recently offered early retirement to almost every hourly worker. With those workers retired, the car company will hire new employees at around half of the salary for current workers.
When an employee is covered by both the state minimum and the federal minimum, the worker is entitled to whichever is higher. Michigan minimum wage is higher than the federal rate, so almost every employee in Michigan is entitled to the state minimum wage.
Michigan employees who earn tips haven’t seen an increase in their minimum wage for a couple of years. Currently, their minimum wage is $2.65 per hour. After July 1, 2008, tipped employees who declare at least $4.75 per hour, can be paid at the tipped rate. Otherwise, the employer must pay a high enough cash wage to equal the minimum wage, when added to tips. Overtime for tipped employees goes up to $6.35 per hour.
The state minimum wage covers each Michigan employer with 2 or more employees over the age of 16. Under both federal and state law, all workers who put in more than 40 hours per week are entitled to overtime pay at 1.5 times the usual hourly rate.
These minimum wage and overtime laws are enforced by the Michigan Wage and Hour Division of the Department of Labor and Economic Growth.
Michigan Comp Time
The Fair Labor Standards Act of 1938 (FLSA) requires companies to pay workers 1.5 time the usual hourly rate for any time worked over 40 hours in one week. Employers are specifically prohibited by FLSA from offering time off in the future (compensatory time or comp time) as a substitute for over time pay, even if the worker asks for “comp time”.
Non-profit organizations are the exception to the FLSA. They can grant comp time instead of overtime, but only if the employee agrees.
A few states, including Michigan, have enacted laws to allow companies to substitute comp time for overtime pay. The Michigan Minimum Wage Law of 1964 allows employers, in some cases, to grant comp time rather than pay overtime wages. The Michigan law applies to all employers with more than one worker over the age of 16.
Because the FLSA prohibits comp time, the Michigan law doesn’t apply to any business covered by the FLSA. Employers who want to understand their eligibility to grant comp time can consult MCL 408.384a (8) of the Michigan Compiled Laws.
Michigan companies not covered by FLSA may grant comp time instead of overtime pay, but only if the worker agrees to this practice in writing. According the Michigan Department of Labor and Economic Development, workers can not be “coerced, intimidated, or required as a condition of employment to accept compensatory time”.
Specific rules apply to granting comp time. Only employees who receive 10 paid days of leave each year are eligible for comp time. Workers who have less than 10 days paid leave must receive overtime pay.
Businesses must grant 1.5 hours of comp time for each hour of overtime, and keep detailed records of hours worked, comp time due to each worker, and when that time is used.
Employees can accrue comp time, but only up to 240 hours. Any time over that must be paid at the overtime rate. Employees may also request to be paid retroactively for overtime instead of taking comp time. The company must comply within 30 days, whether the request is verbal or written.
Employers should be prepared for even more minimum wage changes in 2008. Illinois, Michigan, West Virginia and Kentucky each have minimum wage changes on the books that will take effect on July 1, 2008.
The Illinois minimum wage increases from $7.50 to $7.75 on July 1, 2008. This 25 cent increase is the most recent in a series of minimum wage increases under Illinois Governor Rod Blagojevich. Another increase is scheduled for July 1, 2009, which will bring the Illinois minimum wage to $8.00 per hour.
The Michigan minimum wage will increase by 25 cents, from $7.15 to $7.40 per hour on July 1, 2008. Michigan has also seen a series of minimum wage increases in recent years. The Michigan increase is controversial, because the state has struggled with higher unemployment for the past two years. Michigan has lost a number of high-profile employers in recent years to neighboring Indiana, where the state minimum wage is lower, currently at $5.85 per hour.
In West Virginia, the minimum wage will increase a whopping 70 cents per hour on July 1, 2008, from $6.55 per hour to $7.25 per hour.
The Kentucky minimum wage will also increase by 70 cents, from $5.85 to $6.55 per hour on July 1, 2008.
The federal minimum wage will increase on July 24, 2008, from $5.85 to $6.55 per hour. The federal minimum wage covers the employees of businesses engaged in interstate commerce or companies with annual earnings over $500,000. Most employers in the U.S. are covered under the federal law.
The federal minimum wage may apply to individual employees as well as businesses. For example, a worker whose job entails answering out-of-state calls qualifies for the federal minimum wage. A worker who ships packages across state lines would also qualify.
If the federal and state minimum wage laws differ, the employee is entitled to whichever provides the greater benefit.
In addition, a number of states will increase the state minimum wage on July 24, 2008 when the federal minimum wage increases. In most of these states, the minimum wage statute doesn’t mention a dollar amount. Instead, it simply extends the federal minimum wage coverage to smaller employers, and ties the state rate to the federal rate.
The minimum wage in Indiana, Idaho, Maryland, North Carolina, North Dakota, Oklahoma, South Dakota, Texas, Utah, Virginia, Montana and Nebraska will increase to $6.55 per hour when the federal minimum wage increases on July 24, 2008.
In Ohio, the state rate will increase from $5.85 to $6.55 per hour on July 24, 2008. However, the change will affect only companies with an annual revenue less than $255,000. For other companies, the state minimum wage remains $7.00 per hour, as it has been since January 1, 2008.
There are three states where the increase in the federal rate will not affect the state minimum wage. In Georgia and Wyoming, the state minimum wage remains at $5.15 per hour. In Kansas, the state minimum wage remains at $2.65 per hour.
In addition, five states have no state minimum wage. Mississippi, Alabama, Louisiana, Tennessee and South Carolina have never implemented a state minimum wage. Most employers in those states are covered by the federal minimum wage.
On January 1, 2008, fourteen states increased the state minimum wage.
The federal minimum wage increased by 70 cents on July 24, 2007 under the Fair Minimum Wage Act of 2007. The rate went from $5.15 to $5.85 per hour. This was the first increase in more than a decade. Two more increases are on the horizon. On July 24, 2008 the federal rate will increase by 70 cents to $6.55 per hour. Finally, on July 24, 2009, the federal rate will increase to $$.25 per hour. The increase amounts to an additional $1,456 per year for a full-time minimum wage worker.