Michigan Legislates New Minimum Wage Law
May 27th, 2014 the Michigan legislature passed, and Governor Snyder signed, a new minimum wage law giving it immediate effect. The bill would repeal the existing minimum wage law and replace it with a new statute, Michigan Public Act 138 which is officially named the Workforce Opportunity Wage Act. Beginning this September, the current minimum wage in Michigan of $7.40/hour, which has been in effect for several years, will increase to $8.15/hour.
Tipped employees’ minimum wage will increase to $2.93/hour in September as well.
This initial increase in September marks one of a series of increases to the state minimum wage that will go into effect.
The following details subsequent scheduled increases:
Beginning January 1, 2016, $8.50.
Beginning January 1, 2017, $8.90.
Beginning January 1, 2018, $9.25.
Additional highlights from the bill include:
-an inflation adjustment provision that goes into effect in January 2019. The provision will implement automatic increases to the minimum wage based on the increase to the Consumer Price Index (CPI) for the Midwest region. The formula will be calculated on an average annual change in the CPI for the most recent five-year period. The new rate will be posted each year on February 1st. The Michigan State Treasurer will adjust the average annual rate and it will go into effect beginning April 1st of that same year. Any increase will be capped at 3.5%.
-any increase prescribed will not take effect if the state’s unemployment rate as determined by the federal Bureau of Labor Statistics is over 8.5% for the preceding year.
-by repealing the old law and enacting an entirely new minimum wage law, legislators disrupted the Michigan ballot initiative that would have increased the minimum wage to $10.10/hour and, increased the tipped workers’ minimum wage up to the regular minimum wage.
-new employees under 20 years of age, their employers will be allowed to set a training wage of $4.25/hour for the first 90 days of employment. If the new employee is under 18 years of age when the 90-day training period ends, that employee can be paid 85% of the general minimum wage at that time. The law calls for a fine of $1,000 against any employer who “switches out” or otherwise displaces a young worker because he or she reached 18 years of age.
– tipped workers will receive a new minimum wage that will be set to 38% of the minimum wage if all of the following occur:
• The employee receives gratuities in the course of his or her employment.
• If the gratuities described in subdivision (a) plus the minimum hourly wage rate under this subsection do not equal or exceed the minimum hourly wage otherwise established under Section 4, the employer pays any shortfall to the employee.
• The gratuities are proven gratuities, as indicated by the employee’s declaration for purposes of the federal insurance contributions act, 26 USC 3101 to 3128.
• The employee was informed by the employer of the provisions of this section.
Since the new law abolished the existing Minimum Wage law, the old wage and hour statute was included in the new language. Exemptions from the minimum wage law, such as for certain public employers and the Executive, Professional and Administrative exemptions that most employers are familiar with from the federal wage and hour laws continue to be included without any change.
Please contact our government relations team with any questions or comments. Your feedback is always welcome.
Email: bbochniak@michbusiness.org or by phone: 586-393-8800, ext. 401.
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