MINIMUM WAGE INCREASE EFFECTIVE SUNDAY, OCTOBER 1

Wage set to increase from $5.15 to $6.95; cash wage for tipped employees remains at $2.65

On Sunday, October 1, the state minimum wage is effectively increased from $5.15 to $6.95.  Regardless of when your pay period starts and ends, all employees, with the exception of youth minimum wage and youth training wage employees (see below), must be paid $6.95 per hour.

The minimum cash wage for tipped employees remains at $2.65, meaning that, in order to claim the full tip credit, the tips received by these employees must be equal to or greater than $4.30 per hour.

The state of Michigan appears to not have sent out any guidance to employers regarding this change.  However, an employer’s obligation to comply does not change.

Overtime rate for tipped employees

The formula for determining the overtime rate for tipped employees remains the same:

[minimum wage rate   x   1.5]   -   tip credit   =   overtime pay

Prior to October 1, the formula looked like this provided reported tips per hour is equal to or greater than $2.50:
[$5.15   x   1.5]   -   $2.50   =   $5.225

Effective October 1, the formula will be as follows, provided reported tips per hour is equal to or greater than $4.30:

[$6.95   x   1.5]   -   $4.30   =   $6.125

Training wage remains in effect

The provision in the state minimum wage law allowing a training wage of $4.25 per hour to employees who are between the ages of 16 and 19 remains in effect.  Employers may pay these employees a training wage of $4.25 per hour for the first 90 days of their employment.

New youth minimum wage takes effect

Also effective October 1 is a new state youth training wage.  For 16- and 17-year-old employees, employers may pay a minimum wage that is at least 85 percent of the state minimum wage of $6.95.  This wage is $5.91.

If you have any questions regarding this change, please do not hesitate to contact the MRA Public Affairs Department at (800) 968-9668.