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Michigan Overtime and Wage Law

Michigan Overtime and Labor Attorney

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.

What’s in This Article

a table of contents

Minimum Wage Regulations in Michigan:

  • $9.87 as of January 1, 2021
  • $9.65 as of January 1, 2020
  • $9.45 as of March 29, 2019 
  • $9.25 for 2018
  • $8.90 for 2017
  • $8.50 for 2016
  • $8.15 prior to 2016

Tipped Employees:

  • $3.75 as of January 1, 2021
  • $3.67 as of January 1, 2020
  • $3.59 as of March 29, 2019 
  • $3.52 for 2018
  • $3.38 for 2017

Tipped employees may be paid at these lower rates as long as their tips plus wages equal at least the regular minimum wage rate.

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.

Overtime Regulations in Michigan:

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.

Compensatory Time in Michigan:

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 timenearly 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 Fair Pay Rules
  • Commissioned salespeople
  • Elected officials and political appointees
  • Agricultural employees
  • Employees under the age of 18 (although they must be paid at least 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.

Misclassification of Independent Contractors

While there are situations in which workers are legitimately running their own business and properly treated as independent contractors who are not entitled to receive overtime, employers are not allowed to mischaracterize employee roles to avoid paying overtime compensation. 

Merely labeling a worker as an independent contractor, or even entering into a written agreement, is not enough to avoid the labor laws on overtime pay.  While there is no single definition of “independent contractor” under Michigan labor laws, there are several factors to be considered in determining if a worker in Michigan is an employee or independent contractor (a/k/a 1099 employee) 

If properly classified as an independent contractor under Michigan law, workers are typically eligible for only the specific compensation bargained for in a contract. 

Commissioned Salespeople:

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 in Michigan:

Policies are at the discretion of the employer, however, Michigan law does not require supplementary pay for work completed on weekends or holidays. Employees do not have to offer holiday or vacation time, or other pay to employees for any time not worked.

Michigan Meal Breaks / Rest Periods:

Michigan does not require employers to offer breaks to adult employees. If an employer chooses to provide breaks, they must follow the Federal Requirements. These requirements state that any breaks of 20 minutes or less must be paid. Any meal break of 20 minutes or more can be unpaid, as long as the employee is relieved of all duties during this time.

Reporting Time Pay in Michigan:

Neither Michigan nor the Federal law require employees to be paid if an employee comes to work expecting to work for a certain number of hours but is sent home early.

Deductions:

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.

Retaliation:

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.