Michigan Minimum Wage Details in the News

July 6th, 2007 Posted by Amelia

The new increase to the Michigan minimum wage, which was effective on July 1 2007, includes important exceptions for young workers and for tipped workers. Under the current statute, tipped workers may be paid as little as $2.65 per hour. Workers under the age of 18 may be paid $6.08 per hour.

Because of recent changes to the law, it is vitally important that all employers update their Michigan minimum wage poster. This is a legal requirement, even in businesses where every employee is paid more than the minimum wage.

Despite the increase in the Michigan minimum wage, the hourly rate for tipped employees remains $2.65, a rate unchanged since 1964. In order to qualify for the $2.65 rate, employees must earn tips of $4.50 per hour or more. The tips must be reported in writing by the employee.

Effective July 1, 2007 the Michigan minimum wage increased by 20 cents, from $6.95 per hour to $7.15 per hour. This brings the total hike in the state minimum wage to $2.00 in just 10 months, a 39% increase from $5.15 in September 2006 to the current rate. This compares to the rate increase for tipped employees over the same period, of 0%.

Under the current law, tipped employees working more than 40 hours per week are entitled to overtime pay at a rate of $6.225 per hour, provided they report at least $4.50 per hour in tips.

In either case, a written tip statement signed by the employee and dated before the paycheck was received must be completed. Employers are legally bound to retain payroll records, including tip statements. Employees are entitled to a higher rate of pay for any period during which they did not average at least $4.50 per hour in tips.

Repeated efforts in the state to increase the minimum wage for tipped employees have met with failure so far. In late 2006, Senate Minority Leader Bob Emerson, a Democrat from Flint, introduced State Senate Bill 1388. The bill would have completely eliminated the tip credit, effectively establishing the state minimum wage for tipped employees at the same rate as other employees.

A similar House bill would have established the tipped rate at $4.65 per hour, with an additional increase to $4.90 per hour on July 1, 2008. The bill would have permanently pegged the tipped rate at $2.50 less than the state minimum wage.

Even though both bills were supported by Michigan Governor Jennifer Granholm, it was defeated. Lobbying by the Michigan Restaurant Association was a major factor in the bill’s defeat. Despite that setback, Governor Granholm and legislative leaders have vowed to “finish the job” by reducing the tip credit and indexing the minimum wage to annual inflation.   

The current Michigan minimum wage statute was signed into law in March, 2006. The law permits workers under the age of 18 to be paid a rate equal to 85% of the minimum wage. Currently, that rate is 85% of the state minimum wage of $7.15 per hour, or $6.08 per hour. This is referred to as the “youth sub-minimum wage.”

The law also extends provisions that permit employers to grant compensatory time off – commonly called “comp time” – in lieu of paying overtime wages. However, the comp time provisions DO NOT apply to any employee or employer who is covered under the federal Fair Labor Standards Act (FLSA). This includes most of the employers in the state.

A wide variety of employers are covered under the FLSA, and therefore cannot give comp time in lieu of overtime…even at an employee’s request. These include any employer who produces goods for sale outside of Michigan, and any employer with annual gross revenue of more than $500,000.

Anyone who employs a domestic worker who is paid at least $50 per quarter or works more than 8 hours per week is specifically prohibited from giving comp time in lieu of overtime pay.

The law also prohibits comp time for workers employed in hospital or healthcare facilities, as preschool, elementary, secondary or college teachers, workers in the agricultural field, and those employed in federal, state or local governments.  

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Overtime Labor Law Governing Michigan

August 10th, 2006 Posted by Mark

Michigan law makes it pretty clear who gets overtime and who doesn’t get overtime pay in the state. So let’s take a closer look and see exactly where the line is drawn.

For starters, it’s important for us to know where Michigan law starts and where federal laws end. The federal overtime law, part of the Fair Labor Standards Act of 1938, states that certain businesses are held accountable to this law.

Employers who make goods or sell services outside of Michigan and any company that makes more than $500,000 in annual revenues are covered under the federal law, and not Michigan’s state overtime laws.

Interestingly enough, also included in the federal law are any domestic service workers, day workers, babysitters, groundskeepers, and the like who earn $50 or more in cash as pay in a quarter of the year, or who work more than 8 hours a week at their job. Federal law also covers hospitals, schools, large agricultural firms, and all government offices.

Now onto the Michigan law, which covers all the rest. Or to be more specific, the Michigan law covers employers who employ 2 or more workers who are age 16 or older, as well as any industry where the state minimum wage is higher than the federal minimum wage.

Not only do the Michigan state labor laws cover the issues of minimum wages, and make sure that employees who work more than 40 hours a week get time and a half pay for each minute over 40 hours spent working. They also set wages for tipped employees, or trainee employees.

Michigan’s overtime law also allows employees to use their overtime as compensatory time, instead of forcing them to collect special pay all the time for it. This is one of facets that makes Michigan law different than other states.

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