Minimum wage employees will earn $9.25 per hour effective Jan. 1, 2018. This is an increase from $8.90 in 2017.
This wage increase is a result of Public Act 138 which took effect in May 2014. It applies to Michigan employers with two or more employees age 16 and older.
This is the fourth wage increase enacted by the ruling.
The minimum hourly wage will also increase to $3.52 per hour for employees that regularly receive tips, a 14¢ increase from $3.38.
Keep in mind, if an employee’s tips plus his/her minimum hourly wage rate don’t equal or exceed the minimum hourly wage, the employer must pay the difference to the employee.
For example: Mike is a waiter. He works a five hour shift. As a regular minimum wage employee, Mike is paid $46.25 before taxes.
If the tip credit is applied, Mike’s hourly wage of $3.52 for five hours plus $20 of gratuity equals $37.20.
This doesn’t equal or exceed the minimum hourly wage, so his employer would have to pay the difference of $9.05.
In addition, Act 138 also allows Michigan employers to pay 85% of the minimum wage to 16 and 17 year-old employees.
Now, this rate will be $7.86 per hour. This exceeds the federal minimum wage of $7.25.
Next steps
Review your hourly employees’ wages and plan to increase their pay effective Jan. 1, 2018. Employers covered by state and federal minimum wage law should pay the higher rate.
Have questions about the minimum wage increase? Let’s talk!
