Michigan — Wage & Hour

Michigan's minimum hourly wage is $13.73 effective January 1, 2026, rising to $15.00 on January 1, 2027. Beginning in October 2027, the state treasurer calculates an annual inflation adjustment using the Consumer Price Index for the midwest region (CPI-U), with the adjusted rate published by November 1 and effective each following January 1.

Source: MCL § 408.934

Michigan requires overtime pay at 1.5× the regular rate for all hours worked over 40 in a workweek. The state does not impose a daily overtime threshold; only the weekly calculation applies. Employers with two or more employees are covered under the Improved Workforce Opportunity Wage Act.

Source: MCL § 408.934a

Michigan allows employers to pay a reduced cash wage to tipped employees and claim a tip credit for the difference between that cash wage and the full minimum wage, provided certain conditions are met. As of January 1, 2026, the tipped minimum wage is $5.49 per hour (40% of the $13.73 standard minimum wage). The maximum tip credit an employer may claim is $8.24 per hour.

Eligibility for the tip credit

Under MCL § 408.934d, an employer may pay the lower tipped wage only if all of the following conditions are satisfied:

1. The employee receives gratuities in the course of employment;
2. Tips equal or exceed the credit amount — the employee's actual tips must equal or exceed the difference between the tipped minimum wage and the full minimum wage ($8.24/hour in 2026);
3. Tips are proven gratuities reported by the employee for purposes of the Federal Insurance Contributions Act (26 U.S.C. §§ 3101–3128);
4. Tips are retained by the employee — the entirety of gratuities must be retained by the employee who receives them, except as voluntarily shared with other employees who are directly or indirectly part of the chain of service and whose duties are not primarily managerial or supervisory.

If an employee's tips plus the tipped cash wage do not equal or exceed $13.73 per hour in any workweek, the employer must make up the shortfall to bring total compensation to at least the full minimum wage.

Scheduled increases through 2031

Michigan's tipped minimum wage is expressed as a percentage of the general minimum wage, and that percentage increases on a statutory schedule. The tipped wage percentages are:

• January 1, 2026: 40% ($5.49/hour, based on $13.73 minimum wage)
• January 1, 2027: 42% ($6.30/hour, based on $15.00 minimum wage)
• January 1, 2028: 44%
• January 1, 2029: 46%
• January 1, 2030: 48%
• January 1, 2031 and thereafter: 50%

Beginning in 2027, the general minimum wage will be adjusted annually for inflation using the Consumer Price Index for the midwest region (CPI-U), and the tipped wage percentage will continue to rise according to this schedule until it reaches 50% in 2031 and remains at that level in subsequent years.

Tip pooling and retention

Gratuities remain the property of the employee who receives them, regardless of whether the employer pays the tipped minimum wage or the full minimum wage. MCL § 408.934d(4) prohibits mandatory tip sharing with managerial or supervisory employees. Voluntary tip-sharing arrangements among front-of-house and back-of-house employees who are directly or indirectly part of the chain of service are permitted under subsection (1)(d), but employers taking the tip credit may not compel participation in pooling arrangements that include employees outside the chain of service.

Service charges

Gratuities are tips or voluntary monetary contributions received from a guest, patron, or customer. Service charges added by the employer are not gratuities; they are considered wages and do not count toward the tip credit. Employers must provide written notice to employees and consumers of the employer's plan to distribute service charges (MCL § 408.934d(5)).

Enforcement

Michigan law now includes a fine of up to $2,500 for a tipped employee pay violation.

Source: MCL § 408.934d Source: MCL § 408.934d.amended (revived schedule) Source: Michigan LEO wage increase notice

Michigan requires nearly all employers to provide earned sick time to employees under the Earned Sick Time Act (ESTA), effective February 21, 2025, for employers with 11 or more employees and October 1, 2025, for small businesses (10 or fewer employees). The Act was originally passed by initiative petition in 2018, then revived by the Michigan Supreme Court in Mothering Justice v. Attorney General (July 31, 2024) after the court held that legislative amendments to the ballot initiative violated the Michigan Constitution. The Legislature enacted further amendments effective February 21, 2025, through 2025 PA 2.

Employer size thresholds and compliance deadlines

Under MCL § 408.962(l), a "small business" is an employer for which 10 or fewer individuals work for compensation during a given week. In determining the count, all individuals performing work on a full-time, part-time, or temporary basis must be counted, including individuals made available to work through temporary services or staffing agencies. An employer is not a small business if it maintained more than 10 employees on its payroll during any 20 or more calendar workweeks in either the current or immediately preceding calendar year.

Employers with 11 or more employees must comply as of February 21, 2025. Small businesses (10 or fewer) must comply beginning October 1, 2025. A small business that did not employ any employee on or before February 21, 2022, is not required to comply with the Act until 3 years after the date the employer first employs an employee (MCL § 408.963(2)).

Accrual rates and annual usage caps

Employees accrue earned sick time at a rate of 1 hour for every 30 hours worked (MCL § 408.963(1) and (3)). Exempt employees (those exempt from overtime under FLSA § 13(a)(1)) are assumed to work 40 hours per workweek unless the employee's normal workweek is less than 40 hours, in which case accrual is based on the actual normal workweek.

Usage caps:

• Small businesses (10 or fewer employees): May limit usage to 40 hours of paid earned sick time per year.
• All other employers: May limit usage to 72 hours of paid earned sick time per year.

Employers may select higher limits. The term "year" means a regular and consecutive 12-month period as determined by the employer (MCL § 408.963(10)).

Carryover and frontloading alternatives

Earned sick time carries over from year to year, but employers may cap carryover at 40 hours (small businesses) or 72 hours (other employers) (MCL § 408.963(5)). As an alternative to accrual, employers may frontload the full annual amount (40 or 72 hours) at the beginning of the year for immediate use. Employers who frontload are not required to allow carryover, track accrual, or pay out unused time at separation (MCL § 408.963(2), (3), and (5)).

For part-time employees, employers may frontload sick time proportional to the employee's expected hours, provided the employer gives written notice of expected hours at hire and provides additional accrued time if the employee works more hours than anticipated (MCL § 408.963(4)).

When earned sick time may be used

An employee may use accrued earned sick time as it is accrued. However, employers may require employees hired after February 21, 2025, to wait until 120 calendar days after commencing employment before using accrued earned sick time (MCL § 408.963(1)).

Permitted uses

Under MCL § 408.964(1), employers must permit employees to use earned sick time for any of the following:

(a) The employee's own mental or physical illness, injury, or health condition; medical diagnosis, care, or treatment; or preventative medical care.

(b) A family member's mental or physical illness, injury, or health condition; medical diagnosis, care, or treatment; or preventative medical care. "Family member" is defined broadly in MCL § 408.962(h) to include biological, adopted, or foster children, stepchildren, legal wards, children of a domestic partner, or a child to whom the employee stands in loco parentis; biological, foster, step-, or adoptive parents or legal guardians; spouses or domestic partners; grandparents, grandchildren, or siblings (biological, foster, step-, or adoptive); and any individual whose close association with the employee is the equivalent of a family relationship.

(c) If the employee or a family member is a victim of domestic violence or sexual assault: medical care or psychological or other counseling for physical or psychological injury or disability; obtaining services from a victim services organization; relocating due to domestic violence or sexual assault; obtaining legal services; or participating in any civil or criminal proceedings related to or resulting from the domestic violence or sexual assault.

(d) Meetings at a child's school or place of care related to the child's health or disability, or the effects of domestic violence or sexual assault on the child.

(e) Closure of the employee's place of business by order of a public official due to a public health emergency; an employee's need to care for a child whose school or place of care has been closed by order of a public official due to a public health emergency; or when it has been determined by health authorities or a health care provider that the employee's or family member's presence in the community would jeopardize the health of others because of exposure to a communicable disease, whether or not the employee or family member has actually contracted the disease.

Pay rate

Employers must pay each employee using earned sick time at a rate equal to the greater of the employee's normal hourly wage or base wage, or the minimum wage under Michigan's Improved Workforce Opportunity Wage Act—but not less than the minimum wage rate established in MCL § 408.934. Employers are not required to include overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece-rate pay, tips, or gratuities in the calculation of the normal hourly wage or base wage (MCL § 408.963(8)).

Advance notice and documentation

For foreseeable uses of earned sick time, employers may require up to 7 days' advance notice (MCL § 408.964(2)). For unforeseeable uses, employers may require notice as soon as practicable, or in accordance with the employer's policy on requesting sick time or leave, provided the employer gave the employee a written copy of the policy at hire (or February 21, 2025, whichever is later) and the policy allows the employee to provide notice after becoming aware of the need (MCL § 408.964(3)).

Employers may require reasonable documentation for earned sick time of more than 3 consecutive days (MCL § 408.964(6)). Documentation signed by a health care professional indicating that earned sick time is necessary is reasonable. In cases of domestic violence or sexual assault, the employee may select one of: a police report, a signed statement from a victim and witness advocate, or a court document related to domestic violence or sexual assault. Employers may not require that documentation explain the nature of the illness or the details of violence. If an employer requires documentation, the employer must pay all out-of-pocket expenses the employee incurs in obtaining it (MCL § 408.964(6) and (7)).

Earned sick time may be used in 1-hour increments or the smallest increment the employer uses to account for absences or use of other time (MCL § 408.964(5)).

Prohibited employer actions

Employers may not require an employee to search for or secure a replacement worker as a condition for using earned sick time (MCL § 408.963(9)).

Source: MCL §§ 408.961–408.974 (Earned Sick Time Act) Source: MCL § 408.962 (Definitions) Source: MCL § 408.963 (Accrual and use requirements) Source: MCL § 408.964 (Permitted uses and documentation) Source: 2025 PA 2 (Amendatory act, effective Feb. 21, 2025)

Michigan allows employers to pay reduced wage rates to certain young workers under two distinct provisions in MCL § 408.934b of the Improved Workforce Opportunity Wage Act: an 85% youth minimum wage for employees aged 16–17, and a $4.25 training wage for newly hired employees under age 20.

85% youth minimum wage (ages 16–17)

Under MCL § 408.934b(2), the minimum hourly wage for an employee who is less than 18 years of age is 85% of the general minimum hourly wage established in MCL § 408.934. Because the general minimum wage is $13.73 effective January 1, 2026, the 85% youth rate is $11.67 per hour ($13.73 × 0.85). When the general minimum rises to $15.00 on January 1, 2027, the youth rate will become $12.75. Beginning in October 2027, the state treasurer adjusts the general minimum wage annually for inflation using the Consumer Price Index for the midwest region (CPI-U), so the youth wage will adjust proportionally each year, remaining at 85% of the prevailing minimum.

The 85% rate applies only while the employee remains under 18. Once an employee turns 18, the employer must pay the full minimum wage. The statute does not address employees aged 15 and younger; employers of workers in that age group are subject to the federal Fair Labor Standards Act minimum wage ($7.25 per hour) or, if the conditions below are met, the training wage.

Training wage for newly hired workers under age 20

MCL § 408.934b(1) permits an employer to pay a new employee who is less than 20 years of age a training hourly wage of $4.25 for the employee's first 90 days of employment. The $4.25 rate is a fixed statutory amount—it does not adjust with changes to the general minimum wage. After the initial 90 calendar days, the employer must pay at least the otherwise applicable minimum wage: the full minimum if the employee is 18 or older, or the 85% youth wage if the employee remains 16 or 17.

The training wage and the 85% youth wage are mutually exclusive during the first 90 days of employment. An employer hiring a new 16- or 17-year-old may pay either the $4.25 training wage (subsection (1)) or the 85% youth wage (subsection (2)), but the statute provides that the training wage is "in lieu of the minimum hourly wage otherwise prescribed by this act." In practice, most employers choose the lower $4.25 training wage for the first 90 days, then switch to the 85% youth rate if the employee remains 16 or 17, or to the full minimum wage if the employee has turned 18.

Anti-displacement rule

MCL § 408.934b(3) prohibits an employer from displacing an employee in order to hire an individual at the youth or training wage. "Displace" is defined to include termination of employment, reduction of hours, reduction of wages, or reduction of employment benefits. An employer who lays off a worker earning the full minimum wage to hire a teenager at the reduced rate violates this provision. The statute does not specify a separate penalty, so violations are subject to the general enforcement provisions of the Improved Workforce Opportunity Wage Act, including civil fines under MCL § 408.939.

Overtime for youth and training wage workers

Employees paid the youth or training wage remain entitled to overtime at 1.5× their regular rate for hours worked over 40 in a workweek under MCL § 408.934a. For example, a 16-year-old paid the 2026 youth wage of $11.67 has an overtime rate of $17.51 per hour; an employee paid the $4.25 training wage has an overtime rate of $6.38 per hour.

Exclusion from earned sick time

Workers whose minimum wage rate is determined under MCL § 408.934b—those paid either the 85% youth wage or the $4.25 training wage—are excluded from the definition of "eligible employee" under Michigan's Earned Sick Time Act (MCL § 408.962(e)(viii)). Consequently, employees paid these reduced rates do not accrue paid earned sick time under that Act, though they remain covered by other employment protections.

Source: MCL § 408.934b Source: MCL § 408.934 Source: MCL § 408.934a Source: MCL § 408.962(e)(viii)

Michigan's overtime requirement under MCL § 408.934a(1) does not apply to employees employed in a bona fide executive, administrative, or professional capacity, including academic administrative personnel and teachers in elementary or secondary schools. The statute directs the director of the Department of Licensing and Regulatory Affairs to promulgate administrative rules defining these exemption categories, but those detailed regulations are not readily accessible on official Michigan government websites as of June 1, 2026.

Statutory exemption framework

MCL § 408.934a(4)(a) exempts from overtime "an employee employed in a bona fide executive, administrative, or professional capacity, including an employee employed in the capacity of academic administrative personnel or teacher in an elementary or secondary school." The same subsection includes a Michigan-specific threshold for retail and service establishment employees: such an employee is not excluded from the executive or administrative exemption solely because the employee devotes time to non-exempt activities, provided less than 40% of the employee's hours in the workweek are devoted to activities not directly or closely related to the performance of executive or administrative duties. This 40% tolerance for non-exempt work in retail/service settings is broader than the federal FLSA standard.

Additional statutory exemptions

MCL § 408.934a(4) also exempts:

• Public elected officials (subsection (b))
• Political appointees of an elected official or public body, if not covered by a civil service system (subsection (c))
• Employees of seasonal amusement or recreational establishments that do not operate for more than 7 months in a calendar year (subsection (d))

Relationship to FLSA and federal salary threshold

Michigan employers with two or more employees are generally also covered by the federal Fair Labor Standards Act (FLSA). When both Michigan and federal law apply, the employee must qualify for exemption under both regimes; the more-protective standard governs. Under federal regulations at 29 C.F.R. Part 541, the executive, administrative, and professional exemptions require (1) payment on a salary basis of at least $684 per week ($35,568 annualized), effective January 1, 2020, and (2) satisfaction of specific duties tests enumerated in the regulations. Michigan's statute is silent on a specific dollar threshold; MCL § 408.934a(5) delegates to the director of the Department of Licensing and Regulatory Affairs the authority to promulgate rules defining "the terms used in subsection (4)."

In practice, because most Michigan employers are subject to the FLSA, compliance with the federal Part 541 duties tests and the $684/week salary minimum is the floor. Employers should confirm that claimed exempt employees meet both the Michigan statutory exemption under MCL § 408.934a(4)(a) and the FLSA exemption under 29 U.S.C. § 213(a)(1).

Burden and job-title rule

Exemptions from overtime are construed narrowly under both state and federal law. The employer bears the burden of establishing that an employee falls within an exemption. Job titles do not control; actual job duties and method of compensation determine exempt status.

Teachers and academic administrative personnel

The exemption for teachers and academic administrative personnel in elementary and secondary schools under MCL § 408.934a(4)(a) does not require a minimum salary level, mirroring the federal treatment of bona fide teachers under 29 C.F.R. § 541.303(d).

Source: MCL § 408.934a

Michigan's wage and hour laws provide both private civil remedies for employees and administrative enforcement mechanisms through the Department of Labor and Economic Opportunity. The remedies and penalty structure differ by the type of violation, with enhanced fines for certain tipped-employee violations.

Employee civil actions under the Improved Workforce Opportunity Wage Act

Under MCL § 408.939(1)(a), an employee affected by a violation of Michigan's Improved Workforce Opportunity Wage Act—which governs minimum wage, overtime, tipped wages, and youth wages—may bring a civil action within 3 years of the violation to recover:

1. Unpaid wages: the difference between the amount paid and the amount that should have been paid under the Act;
2. Liquidated damages: an equal additional amount (i.e., 100% of unpaid wages);
3. Costs and reasonable attorney fees as allowed by the court.

This liquidated-damages rule means that an employee owed $5,000 in unpaid overtime can recover $10,000 plus costs and attorney fees if the claim is successful. The 3-year statute of limitations runs from the date of each violation; wage claims typically accrue on each payday when wages are shorted.

An employee may alternatively file a claim with the director of the Department of Labor and Economic Opportunity, who will investigate the claim (MCL § 408.939(1)(b)). If the director determines there is reasonable cause to believe the employer violated the Act and voluntary compliance cannot be obtained within a reasonable period, the director must bring a civil action on the employee's behalf under the same remedies described in subsection (1)(a) (MCL § 408.939(2)). The director may investigate and file a collective action on behalf of all similarly situated employees at the same work site who have not already brought their own civil actions. A contract or agreement between the employer and employee—or the employee's acceptance of a lesser wage—does not bar the action (MCL § 408.939(2)).

Civil fines for wage violations

In addition to liability for unpaid wages and liquidated damages, employers face civil fines that vary by violation type:

• General minimum wage or compensatory time violations: An employer who fails to pay the minimum hourly wage in violation of the Act, or who violates a provision of MCL § 408.934a governing an employee's compensatory time, is subject to a civil fine of not more than $1,000 (MCL § 408.939(3)).

• Tipped employee pay violations: An employer that fails to pay the minimum hourly wage to a tipped employee as required under MCL § 408.934d(1)—which governs the tipped minimum wage, tip credit, tip retention, and tip pooling—is subject to a civil fine of not more than $2,500 (MCL § 408.939(4)). This enhanced penalty reflects the Legislature's judgment that tipped-worker violations warrant a higher fine.

These fines are in addition to the employee's right to recover unpaid wages, liquidated damages, costs, and attorney fees. The fines are assessed by the state and do not go to the employee.

Compensatory time coercion penalty

MCL § 408.934a(3)(f) separately prohibits an employer from intimidating, threatening, or coercing an employee to request or not request compensatory time off in lieu of overtime payment, or requiring an employee to use compensatory time. An employer who violates this anti-coercion rule is subject to a civil fine of not more than $1,000. The statute also forbids discrimination in overtime assignment based on an employee's choice to request or decline compensatory time (MCL § 408.934a(3)(f)).

Earned Sick Time Act enforcement

Michigan's Earned Sick Time Act, MCL §§ 408.961–408.974, separately authorizes employees to bring civil actions for violations of the earned-sick-time requirements. Under MCL § 408.967, an employee may bring a civil action or file a complaint with the Department of Labor and Economic Opportunity. The statute provides for civil remedies and civil fines for violations, including failures to provide earned sick time, retaliatory personnel actions, and notice or recordkeeping violations. The remedies structure parallels the Improved Workforce Opportunity Wage Act, with unpaid sick time treated as unpaid wages subject to recovery, liquidated damages, and attorney fees. Employers are also subject to administrative civil fines for violations of the Act's requirements.

Who enforces: Department of Labor and Economic Opportunity

The director of the Department of Labor and Economic Opportunity (LEO) administers and enforces both the Improved Workforce Opportunity Wage Act and the Earned Sick Time Act. Employees may file administrative complaints with the Wage and Hour Division of LEO, which investigates claims, seeks voluntary compliance, and, when necessary, files civil actions in state court on behalf of employees. Employees retain the independent right to file their own lawsuits in parallel.

No waiver or settlement bar

MCL § 408.939(2) provides that a contract or agreement between the employer and employee—or any acceptance of a lesser wage by the employee—is not a bar to a civil action under the Act. This anti-waiver rule prevents employers from requiring employees to sign away wage claims as a condition of employment or settlement before a full investigation or lawsuit.

Source: MCL § 408.939 Source: MCL § 408.934a(3)(f) Source: MCL § 408.967