Over the past few years, Michigan has had a series of minimum wage increases. And as we look ahead to 2019 and beyond, 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 Michigan’s minimum wage.
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What is the minimum wage in Michigan?
The minimum wage in Michigan is $9.25, which is $2 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).
The state minimum wage last changed in 2017, when it was raised from $8.50 to $8.90 per hour as part of a four-year increase plan, which was signed into law in May 2014.
Will the minimum wage change in 2019?
As of now, yes. On September 5, 2018, the state legislature approved a citizen-led initiative to raise the minimum wage to $10 in 2019. However, there’s concern that the legislature may amend the legislation.
Are there plans to change the minimum wage beyond 2019?
As part of the initiative passed in September, the minimum wage would increase to $10.65 in 2020, $11.35 in 2021, and $12 in 2022, and will adjust with inflation beyond 2022.
Initially, this was supposed to be a ballot initiative that citizens would vote for on November 6, 2018, but instead, the legislature approved the legislation in September, so it wasn’t on the ballot.
While it’s possible lawmakers might amend the legislation in the “lame-duck” period of November or December, such a move would be unprecedented under the state constitution.
How should small business owners prepare for changes to the minimum wage?
Since minimum wage changes 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: If you automate time-consuming and complicated tasks, such as payroll, you have more time to focus on issues like staffing and growing your business.
While these are helpful guidelines to follow, to make sure your business is prepared and stays in compliance, you should discuss Michigan’s minimum wage laws with your accountant and lawyer.