How to Get Ready for Michigan’s Minimum Wage Increase

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Did you know Michigan’s minimum wage is increasing as of January 1, 2018?

Michigan’s minimum wage is set by the Workforce Opportunity Wage Act.  If an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two rates.

Since 2007, Michigan’s minimum wage has exceeded the federal minimum wage, which has been stagnant at $7.25 per hour since July 2009.  So, if you’re an employer in Michigan with 2 or more employees age 16 or older, you must pay Michigan’s higher minimum wage.

Read on to see what’s changing here in Michigan to ensure your organization is compliant!

What’s the Magic Number?

As of January 1, 2018, Michigan’s minimum wage bumps up from $8.90 to $9.25 per hour – a 3.9% increase.Tipped Workers

Minors age 16-17 years of age may be paid 85% of the minimum wage or $7.86 per hour.

Tipped employees can be paid a minimum wage of $3.52 per hour, provided they receive average tips per hour of at least $5.73, which gives them a combined $9.25 per hour minimum wage just like non-tipped workers.  The employer must keep a written tip statement signed by the employee that complies with the requirements of the Act.

Post it!

Along with ensuring you increase hourly rates appropriately, you also need to update your employment postings to reflect the new Michigan minimum wage.

Free posters in English, Spanish, and Arabic are available on the MI Department of Licensing and Regulatory Affairs (LARA) website. Click here to grab your copy!

Penalties

An organization found in violation of the Michigan minimum wage will not only have a public relations headache to deal with, but will also have penalties to pay.

The employer will be responsible for repaying the difference between the wages paid and the wages that should have been paid. They’ll also need to pay an equal additional amount as liquidated damages, other costs, and attorney fees.

Future Increases

MoneyYou might be wondering when the next boost goes into effect.

Beginning in January 2019, and every year thereafter, Michigan’s minimum wage will be determined using the average annual percentage change in the Consumer Price Index for the most recent 5-year period.

The Act dictates that this annual increase will not exceed 3.5%.  Additionally, the new rate will not take effect if the unemployment rate for Michigan is 8.5% or more in the preceding year.

The new minimum wage will be posted by February 1 and effective on April 1st of that year.

Are You Affected?

Does your organization have people that are paid minimum wage?  If so, have you made your wage adjustments already, or will they take place on January 1st?

You can leave your answer in a comment below.

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If there are any topics that you’d like to read more about, please email me directly at jodi@people-mattershr.com.

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People Matters gives support to business owners and leaders in all areas of human resources management including the topic in this article: employment law compliance.

HR is what we at People Matters love to do! We help our clients create great workplaces that engage employees and produce better business results.

Please give me a call at 517-925-8257 or visit our website at www.people-mattershr.com for more information.

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