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In March 2006, the Michigan legislature passed a new minimum wage law, but then amended it in August to address concerns that the new rate would entitle large segments of Michigan’s work force to overtime pay.

For the most part, Michigan’s minimum wage law follows the overtime rules under the Fair Labor Standards Act (FLSA). But the state minimum wage is higher than the federal minimum wage, which is $5.85 per hour as of July 24, 2007. 
As of October 2006, most Michigan employees had to be paid $6.95 per hour. The rate moved to $7.15 on July 1, 2007, and increases to $7.40 on July 1, 2008.

The Michigan Minimum Wage Law that passed in March 2006 would have covered many workers who are exempt from the FLSA’s overtime requirements. Had the legislature not intervened in August, these groups would have been able to collect overtime pay:

  • Truck drivers and those involved in interstate commerce.
  • TV/radio announcers.
  • News editors.
  • Taxi drivers.
  • Newspaper employees.
  • Live-in domestic workers.
  • Commissioned sales staff.
  • Nurses.
  • Computer analysts.

Even with the August changes, the Michigan law doesn’t exactly mirror the FLSA. Employees who provide “companionship services” for the disabled and elderly can collect overtime even though they wouldn’t be eligible under federal law. Similarly, child care workers are eligible for overtime under Michigan’s new law (exception: employees under age 18 who don’t regularly baby-sit more than 20 hours per week).

Compensatory time

In addition, the law entitles employees who meet certain standards to take compensatory time in lieu of overtime pay. Eligible employees may take one and one-half hours off for each hour of overtime worked if:

  • They receive at least 10 days’ leave per year without loss of pay.
  • The agreement to take comp time is in writing or part of a collective-bargaining agreement.
  • The employee’s decision to take comp time in lieu of pay is voluntary.

Employees may accrue up to 240 hours of comp time, which employers must track on their pay stubs. If employees decide to “cash out” their comp time, you must provide the payment within 30 days of their request.

What happens to comp-time benefits when employees leave the company? You must pay their benefits in cash in their final paychecks. Further, you may not use the existence of comp-time balances to delay or infringe on employees’ rights to collect unemployment insurance.

Wage exceptions

The state’s minimum wage law allows employers to pay a training wage of $4.25 per hour to workers under age 20 for the first 90 days of their employment. But you may not displace other workers to make room for training-wage workers, nor regularly fire young workers as they approach their 90-day threshold. The Michigan Department of Labor will fine employers that engage in this practice.

You may pay workers under 18 years old just 85 percent of the state minimum wage. That figure was $5.91 from Oct. 1, 2006, to June 30, 2007. As of July 1, 2007, the minimum wage for minors is $6.08, rising to $6.29 per hour in 2008.

The new law also gives waitresses and other tipped employees a raise of sorts. Such workers must show that their tips plus the $2.65 per hour employers are required to pay them equal or exceed the state minimum wage. ______________________________________
Excerpted from Michigan’s 10 Most Critical Employment Laws, a special bonus report available to subscribers of HR Specialist: Michigan Employment Law.

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