Michigan Overtime and Labor Laws
While most claims for unpaid overtime pay are pursued by private attorneys working on behalf of employees, the Wage and Hour Division of the Michigan Department of Licensing and Regulatory Affairs (LARA) is the state agency responsible for enforcing wage protection laws in Michigan. Additionally, the Federal Fair Labor Standards Act (FLSA) applies in Michigan.
Minimum Wage Regulations
The minimum wage in Michigan is $7.40 per hour. The minimum wage is lowered to $2.65 per hour for employees who receive tips, so long as the tips plus wages is not less than $7.40 per hour. Employers must inform employees of the minimum wage law and keep records of their tips, dated before paychecks are cut. Employees must declare their tips for FICA purposes.
The minimum wage law applies to all employers who employ two or more employees of at least sixteen years of age. Employers may pay its employees who are 16–19 years of age old a training wage of $4.25 per hour for the first 90 days of employment.
In Michigan, non-exempt employees must be paid at the overtime rate-one and a half times the employee’s hourly rate-for all hours worked over 40 in one workweek. The method for determining overtime compensation is identical under Michigan and Federal law.
Employers must firmly establish the beginning time and day of the workweek, and it must remain fixed. This is to prevent employers from changing workweeks in order to sidestep the overtime regulations.
A significant difference between state and federal law is the ability to provide workers with “comp time” instead of paying overtime. Only governmental employers are allowed to use comp time under federal law, however, private employers may be able to do so under Michigan overtime pay laws. An employer may use a compensatory time system so long as the employee agrees in writing. Under this scheme, employees are not entitled to overtime pay. Instead, for every hour an employee works over 40 in a workweek , the employee gets one and a half hours of paid time off.
For an employer to be allowed to implement a compensatory time system the employee must be given at least 10 days of paid time off per year. Additionally, an employee can accrue a maximum of 240 hours in compensatory timenearly a month of paid leave. An employee may be barred from using his compensatory time only if it would be unduly disruptive at that time. When an employee leaves employment (either voluntarily or involuntarily) they are entitled to all wages accrued from their compensated time off.
Specific Exemptions from the Overtime Requirement
Exempt employees are not legally required to receive overtime pay for working in excess of 40 hours per week. In most cases, exempt workers are paid a salary and perform managerial and/or supervisory duties. There are specific criteria to meet each exemption. The most common exemptions to the overtime pay requirements in Michigan are for:
- All workers exempt from the Federal wage laws, including Professional, Administrative, and Executive employees http://www.overtime-flsa.com/overtime-fairpay-rules
- Commissioned salespeople
- Elected officials and political appointees
- Agricultural employees
- Employees under the age of 18 (although they must be paid at leas the Federal minimum wage of $7.25 per hour)
- Employees with certain mental or physical disabilities (a “handicapped rate” is intended to allow disabled individuals whose earning capacity is limited or impaired to more easily find employment)
- Employees employed by the United States
- Volunteer employees
- Employees of amusement and recreational establishments open less than 7 months per year
One Federal exemption, for non-live-in employees of in-home care or companionship services, does not apply in Michigan and such employees are entitled to minimum wage and eligible for overtime.
The method of payment for sales representatives is entirely based on the contract each individual signs. An employer must pay all commission owed to each sales representative within 45 days of terminating the contract. Salespeople who are wrongfully denied payment may recover all commission improperly withheld (twice this amount if the withholding was intentional), plus costs and attorney’s fees, up to $100,000.00.
Holidays / Vacation
Michigan law does not require additional pay for work done on holidays or weekends. Employers are also not required to offer vacation, holiday or other pay for time not worked. These policies are at the discretion of the employer.
Meal Breaks / Rest Periods
Michigan does not require an employer to provide breaks to employees. However if breaks are given, employers must follow the Federal requirements which state that when breaks of 20 minutes or less are given, they must be paid. Meal breaks of 30 minutes or more can be unpaid as long as the employee is relieved of all duties.
Reporting Time Pay
Neither Michigan nor the Federal law requires payment if an employee reports to work expecting to work for a certain number of hours but does not get to work their full schedule.
Michigan law does not specifically address the types of deductions which can be taken; however pursuant to the FLSA, deductions for items such as uniforms, shortages, damaged goods, or trade tools cannot reduce the employee’s hourly wage below the minimum rate.
Statute of Limitations
Suits for unclaimed wages must be brought within three years or else the employee is barred by the statute of limitations.
State Law Remedies / Penalties
An employee who wants an employer investigated for suspected violations may file a written complaint within 12 months after the alleged violation, although retaliation claims must be filed within 30 days.
Employees can file lawsuits to recover all unpaid overtime and minimum wage for three years prior to the filing of a lawsuit. For cases in which the employer’s violations are willful, employees are additionally entitled to an award of “liquidated damages” equal to the amount of all unpaid wages. This means that a successful employee can recover two times the amount of unpaid overtime and minimum wage. A successful plaintiff can also be awarded attorney’s fees and expenses. Wronged employees may even seek unpaid wages through class action suits.
An employer who retaliates against an employee in any way for exercising their rights under the Michigan or Federal law minimum wage and overtime laws is guilty of a misdemeanor. The Michigan Whistleblower’s Protection Act specifically protects reporting a suspected violation of minimum wage or overtime law. An employer may not force an employee to sign a waiver denying the employee the right to disclose his wage, and the employer may not retaliate against an employee in any way for disclosing his wage.
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