State Minimum Wage to Increase on September 1
A Workplace Law Client Alert
06/05/14
On May 27, 2014, Gov. Rick Snyder signed new legislation increasing Michigan’s minimum wage. Under the new law, the current $7.40 minimum wage will incrementally increase to $9.25 by 2018, with the following jumps: $8.15 on September 1, $8.50 on January 1, 2016, $8.90 on January 1, 2017, and $9.25 on January 1, 2018. These increases apply to all Michigan employers with at least two employees. Workers under the age of 18 may be paid 85 percent of the new minimums.
Tipped employees are also increased. Beginning September 1, the minimum wage for tipped employees will be 38 percent of the regular minimum wage, incrementally increasing the current $2.65 per hour tip rate to $3.52 by 2018. Employers must pay the difference to insure that tipped employees earn at least the minimum wage for the work week after tips are counted.
This new minimum wage law almost guarantees continuous increases in the minimum wage after 2018. Starting in January 2019, increases in the minimum wage will be adjusted based on the Midwestern consumer price index (CPI) over a five-year period. Annual adjustments will be capped at 3.5 percent. CPI wage increases are to be effective on April 1 of each year, but will be blocked if the state unemployment rate is 8.5 percent or higher in the preceding year.
Employers who pay more than the minimum wage will be affected by the increases. Employees currently above the minimum wage may expect or seek pay increases to maintain their status. Employers must be ready to respond to these new challenges.
The last increase in the Michigan minimum wage was in 2008. This legislative action was designed to block a petition initiative seeking a November 2014 ballot proposal to raise the minimum wage to $10.10. Ballot proposal supporters have not been deterred by the new minimum wage law and are submitting petitions. The issue will wind up in the courts.
Minimum wages rates can differ from state to state. Moves to push minimum wage increases in other states are ongoing. Employers with multi-state operations must be careful to ensure compliance with local minimum wage laws.
Contact a member of Bodman’s Workplace Law Group if you have a question about the new minimum wage law or other employment law concern.
Bodman PLC Workplace Law Group
• Steven J. Fishman, Workplace Law Group Chair
(248-743-6070 / sfishman@bodmanlaw.com)
• John C. Cashen (248-743-6077 / jcashen@bodmanlaw.com)
• Aaron D. Graves (248-743-6027 / agraves@bodmanlaw.com)
• Lauren A. Kwapis (248-743-6048 / lkwapis@bodmanlaw.com)
• David A. Malinowski
(248-743-6033 / dmalinowski@bodmanlaw.com)
• Christopher P. Mazzoli
(248-743-6066 / cmazzoli@bodmanlaw.com)
• Karen L. Piper (248-743-6025 / kpiper@bodmanlaw.com)
• Maureen Rouse-Ayoub
(248-743-6026 / mrouse-ayoub@bodmanlaw.com)
• Charles M. Russman
(248-743-6039 / crussman@bodmanlaw.com)
• Donald H. Scharg (248-743-6024 / dscharg@bodmanlaw.com)