Michigan — Termination

Michigan recognizes at-will employment as the default relationship under common law. In the absence of a contract specifying otherwise, either the employer or the employee may terminate the employment relationship at any time, for any lawful reason or no reason at all. The Michigan Department of Labor and Economic Opportunity states: "In general, an employer can discharge an employee for a good reason, bad reason, or no reason at all," subject to statutory exceptions for discrimination and other protected actions. The at-will presumption was confirmed in Toussaint v. Blue Cross & Blue Shield of Michigan, 408 Mich. 579 (1980), which held that "contracts for permanent employment or for life have been construed by the court on many occasions" as "indefinite hirings, terminable at the will of either party" absent distinguishing features or consideration beyond services rendered.

Source: Michigan LEO FAQ | Toussaint v. Blue Cross, 408 Mich. 579 (1980)

Michigan law imposes different final-paycheck deadlines depending on whether the separation is involuntary or voluntary, under the Payment of Wages and Fringe Benefits Act (Act 390 of 1978). The timing rules are set forth in MCL § 408.475.

Discharge (involuntary termination). When an employer discharges an employee, the statute requires payment "immediately" of "all wages earned and due, as soon as the amount can with due diligence be determined." MCL § 408.475(2). In practice, this is construed to mean as soon as the employer can calculate the final amount owed—typically on the same day as the termination or the next business day. The statute does not permit employers to delay payment until the next regularly scheduled payday when the separation is involuntary.

Voluntary quit. For an employee who voluntarily leaves employment, the employer must pay "all wages earned and due, as soon as the amount can with due diligence be determined." MCL § 408.475(1). Courts and the Michigan Department of Labor and Economic Opportunity (LEO) have interpreted this to mean the employer must pay by the next regularly scheduled payday following the resignation, not immediately as with discharges. The statute does not require same-day or next-day payment for voluntary separations.

Agricultural exception — hand harvesting. A narrower deadline applies to employees "engaged in any phase of the hand harvesting of crops." For voluntary quit, the employer must pay "not later than 3 days after the employee's voluntary termination of employment." MCL § 408.475(1). For discharge, payment is due "as soon as the amount can, with due diligence, be determined," consistent with the general discharge rule. MCL § 408.475(2). The LEO guidance and Michigan administrative regulations (Mich. Admin. Code R. 408.9007) further specify that discharged hand-harvest employees must be paid within one working day of termination.

Contract employees — deferred-payment exception. The statute carves out an exception for employees "working under contract" if "the amount due cannot be determined until the termination of the contract." MCL § 408.475(3). In such cases, the employer pays under the general wage-payment provisions of MCL § 408.474, and must pay "all wages earned by the employee as nearly as they can be estimated" pending final accounting. This exception is narrow and applies only where the contract's structure genuinely prevents calculation of compensation until completion.

What the final paycheck must include. Under MCL § 408.475, the final paycheck must include all "wages earned and due." This encompasses regular wages, overtime, commissions earned and calculable, and any fringe benefits (such as accrued vacation pay) that the employer's written policy or written contract requires to be paid at termination. Michigan does not mandate payout of accrued unused vacation or PTO by statute; whether those benefits are included turns entirely on the employer's written policy or employment contract under MCL § 408.474. If the written policy is silent or expressly permits forfeiture, the employer may lawfully withhold accrued time. Employers may not, however, delay the final paycheck pending return of company property; the statute does not authorize such a set-off absent the employee's separate written consent.

Effective date and history. Act 390 of 1978 took immediate effect on August 1, 1978. The final-paycheck timing rules in MCL § 408.475 have not been substantively amended since enactment, though administrative responsibility has migrated from the former Wage and Hour Division to the current Wage and Hour Division within the Michigan Department of Labor and Economic Opportunity (as of Executive Reorganization Order 2019-3).

Source: MCL § 408.475 | MCL § 408.474 | Michigan LEO — Payment of Wages at Termination