Minimum Wage and Overtime - Michigan

Effective July 1, 2008, the State of Michigan minimum wage increases to $7.40.

The federal minimum wage increases to $6.55 per hour on July 24, 2008. Most businesses will be required to follow state law because it sets a higher standard.


Timing of the increase

Employers need to pay $7.40 per hour on hours worked after July 1, 2008. So if your pay week ends on June 28 and your normal pay day is on Wednesday, which in this case would be July 2, you can still pay your employees at their old rates of pay.

Employers who pay their employees bi-weekly and have one week at the old minimum wage and one week under the new minimum wage can do either of the following:

• Pay both weeks at the new minimum wage rate of $7.40 per hour.
  
  
• Break down the hours week by week and pay one week at the old rate (the week prior to July 1, 2008) and the other week at the new rate (the week following July 1, 2008).
  

Those employers using an outside payroll service to prepare payroll may want to check on the cost of the extra payroll processing before deciding which option to use.


Key points to remember

• Provides an overtime rate for non-exempt employees of 1½ times the regular rate of pay.
  
  
• Permits tipped employees such as food servers to still be paid $2.65 per hour if they report at least $4.75 in tips per hour starting July 1, 2008.
  
  
• Establishes a training wage for new employees under the age of 20 of $4.25 per hour for the first 90 consecutive calendar days of employment, as long as their work does not displace other workers. After 90 consecutive days of employment or the employee reaches 20 years of age, whichever comes first, the employee must receive the current minimum wage rate.
  
  
• The state's minimum wage law applies to all employees regardless if they are full-time, part-time or under the age of 18.
  
  
• House Bill Number 6213 corrected the differences in Fair Labor Standard Act – Michigan law and Federal law.
  
  
• Beginning July 1, 2008, employees under the age of 18 receive $6.29 per hour or 85% of the state minimum wage, but only until July 24, 2008, when the federal minimum wage increases to $6.55. At that time most businesses will have to follow the higher federal minimum wage and pay $6.55 per hour.