With all the media coverage of federal and state minimum wage laws, do you know if the above statement is true or false? It is true: for most employees working in Michigan, the 2016 minimum wage is $8.50 per hour.
However, it is false for some employees:
Tipped Employees: The employer is not required to pay minimum wage to tipped employees if all of these apply:
- The total of the employer-paid compensation plus tips is equal to or greater than the minimum wage.
- The employee retains all tips.
- The employee customarily and regularly receives more than $30 a month in tips.
If all of these conditions apply, the Michigan employer is only required to pay the employee $3.23 per hour in 2016.
Employees Under Age 20.
- A training wage of $4.25 per hour may be paid to employees 16-19 years of age for the first 90 days of their employment.
- Minors 16-17 years of age may be paid 85% of the minimum hourly wage rate.
Working Out of State. When working out of state, employees must be paid according to the labor laws of the state where the work is performed. For example, Michigan employees who perform work in Minnesota, are subject to Minnesota law, and therefore must be paid a minimum wage of $9.00 ($9.50 effective 8/1/16) for that work.
Future rates. The Michigan minimum wage of $8.50 per hour only applies to 2016. Rates for future years are scheduled to increase. The chart below details Michigan’s current and future minimum wage rates.
Michigan Minimum Wage Schedule*
|Effective Date||Michigan Minimum Hourly Wage Rate||Tipped Employees Hourly Minimum Wage Rate||85% of Minimum Hourly Wage Rate|
* Source: http://www.michigan.gov/lara
** Since 85% of $8.50 is less than the Federal Minimum Wage of $7.25, employees subject to the 85% rule must be paid the Federal Minimum Wage of $7.25 in 2016.
*** Every January, beginning in January 2019, the state treasurer will adjust the minimum wage based on the average annual percentage change in the consumer price index for the most recent 5-year period for which data are available.
So, the real answer to the true or false question posed in the title is “it depends.” Like many payroll situations, it depends on a number of factors. Employers should ensure that they are aware of the details of payroll laws, and also that they keep current on the ever-changing rules and regulations.
Contributed by Roger A. Smith, CPP, owner of Payroll Consulting firm PayrollProf.com.
View the on-demand webinar “Basic Payroll Concepts for Michigan Employers”with Roger Smith.