Over the past few years, Michigan has had a series of minimum wage increases. And as we look ahead, there will be more. As a business owner, it’s important to stay current on these changes so you can plan for the future of your business.
To help you keep track of the latest developments, here’s a rundown of need-to-know facts regarding the Michigan minimum wage.
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What is the minimum wage in Michigan?
The minimum wage in Michigan is $9.65, which is $2.40 higher than the federal minimum wage. Michigan minimum wage laws apply to employers with two or more employees over the age of 16 in one calendar year.
While the minimum wage applies to most employees in Michigan, there are some exceptions, including:
- Tipped employees, who have a minimum wage of $3.52 per hour. This amount plus tips must be equal to or greater than the standard minimum wage.
- Minors: Employees aged 16 to 17 years old can be paid 85 percent of the minimum wage ($7.86). Employees under the age of 20 can be paid as little as $4.25 per hour for their first 90 days of employment at any job.
- Exempt employees under the Fair Labor Standards Act (FLSA) do not fit into the Michigan minimum wage requirements.
- Overtime wages are higher than the state of Michigan minimum wage by one-and-a-half times. The overtime pay in Michigan for employees who work over 40 hours in a single week is $14.48 per extra hour.
The state minimum has been gradually increasing as part of a four-year Michigan minimum wage increase plan. It increased from $9.25 in 2018 to its current rate, and it’s set to go up again in 2021.
Will the minimum wage change in 2021?
Michigan minimum wage history has seen gradual but consistent raises the past few years. Under the Improved Workforce Opportunity Wage Act, the minimum wage has changed every year since 2018, and will increase one more time in 2021 to $9.87 for non-tipped employees and $3.75 for tipped workers.
Are there plans to change the minimum wage beyond 2021?
he goal of the law in place currently is to keep raising the Michigan minimum wage each year so that it will reach $12 per hour by 2030. The original bill that was passed by voters but changed by the legislature had set the goal at $12 by 2022. There are campaigns to raise the minimum wage in Michigan faster, so it’s a good idea to keep track of any changes and check the Michigan employee FAQs regularly.
How should small business owners prepare for changes to the minimum wage?
Since changes to the minimum wage in Michigan will most likely be happening, you should plan accordingly. We recommend taking the following steps to prepare:
- Reevaluate your budget: Review your monthly cash flow, and see if you need to adjust your budget. Take the upcoming minimum wage changes into account, and adjust future hiring plans if necessary.
- Find good employees (and keep them!): To make sure you find the right employees, use best hiring practices and ask smart interview questions to thoroughly vet candidates. Once you find the right employees, invest in them. The hiring process is expensive, but if you prioritize employee retention and keep your staff engaged, you’ll save money in the long run.
- Upgrade your technology: Use tech to solve time-consuming and complicated tasks with tools like automatic payroll. You can have more time to focus on issues like staffing and growing your business when you let tools like Square Payroll software do the work for you. With its small business pricing and custom payroll features, you’ll save money and headaches.
- Know what you need: If you’re just starting out, learn everything you need to begin hiring, like how to get a free EIN. And as your business grows, stay on top of information to help you transition to changing times with our small business resources.
Make sure your business is prepared and stays in compliance by following these helpful guidelines and discussing the Michigan minimum wage laws with your accountant and lawyer.