Getting Paid: Wage Laws and Common Violations

Federal, state, and local laws regulate wages in Michigan. This article describes the different laws and common violations.

The Federal Minimum Wage

The Fair Labor Standard Act (FLSA) sets a minimum wage for all workers in the U.S. The current FLSA minimum wage rate is $7.25 per hour. While workers can be paid more than the FLSA minimum wage, they generally cannot be paid less.

The FLSA also establishes an overtime pay rate. Employees who work more than 40 hours during a single workweek must be paid overtime pay. The overtime pay rate is one-and-one-half (1 ½) times their regular rate of pay. This means overtime pay, using the FLSA minimum wage rate, would be $10.87 per overtime hour.

The FLSA allows state governments to set higher minimum wage and overtime pay rates in their particular state. Michigan has established a higher minimum wage rate— $10.10 per hour.

Michigan’s Minimum Wage

The Michigan Workforce Opportunity Wage Act (WOWA) establishes the minimum wage that Michigan workers must be paid. Currently, the minimum wage in Michigan is $10.10.

The WOWA also has overtime rules. Employees who work more than 40 hours in a single workweek must be paid overtime. The WOWA overtime rate is at least one-and-one-half (1 ½) times their regular pay rate. That means the minimum overtime pay in Michigan is $15.15 per overtime hour.

Tipped Employees

The FLSA and WOWA both address pay rates for employees who commonly get tips and gratuities. Tipped workers must be paid at set minimum wage and overtime rates. However, employers can take a tip credit toward their minimum wage obligation. This means employees will get some of their wages from their employer and the rest will be paid in tips. The combined total of wages paid by the employer and tips received each week must meet the minimum wage and overtime requirements of federal and state laws.

Under the FLSA, employers must pay tipped employees at least $2.13 per hour. The WOWA rate is higher. Tipped employees in Michigan must be paid $3.84. This rate adjusts each year to remain at 38% of the state’s regular minimum wage.

The overtime rate for tipped employees is one-and-one-half (1 ½) times their regular pay rate. The calculation used to determine that amount is a bit confusing. You have to account for the tip credit used to determine a tipped employee is at least making the regular minimum wage. The overtime rate for tipped employees is $8.89.

Other Special Groups of Employees

Both the FLSA and WOWA allow lower minimum wage rates for special groups of employees. Teenage employees are one of those groups. In Michigan, employers can pay employees between 16 and 17 years old 85% of the minimum hourly wage rate ($8.59 per hour). Employees between 16 and 19 years old can be paid a training wage of $4.25 per hour during the first 90 days of employment.

However, an employer may not replace or reduce the hours or wages of an employee paid at or above state minimum wage with a lower-paid trainee or minor.

An employer can ask the director of the Department of Licensing and Regulatory Affairs to set lower pay rates for certain groups of its employees. Examples of these groups are apprentices, learners, and people with disabilities who are not able to meet normal production standards.

Not all employees or employers are covered by the FLSA or WOWA. To find out if your job is covered, read When Wage Laws Apply.

The Michigan Payment of Wages and Fringe Benefits Act

The FLSA and the Michigan Payment of Wages and Fringe Benefits Act (PWFBA) allow employers to make deductions from an employee’s wages. To learn more about employer deductions, read What Can My Employer Deduct from My Paycheck? The PWFBA regulates how and when workers are paid.

The PWFBA also requires that employees be paid in U.S. currency. The payment can be made by check, direct deposit into an employee’s bank account, or issuance of a debit card. Employers must establish a regular schedule for paying employees. Most common pay schedules are weekly, bi-weekly (every two weeks), bi-monthly (twice a month), and monthly.

When employment ends, wages are due as soon as the total amount owed can be determined. It doesn’t matter if the employee was fired or quit. Employees can file a complaint with Michigan’s Wage and Hour Program for violations of the PWFBA. To learn more about filing a complaint, read Filing a Complaint with the Michigan Wage and Hour Program.

Prevailing Wage Laws

Some employees working on government-funded projects (usually construction) must get higher wage rates. These wage rates are known as prevailing wage rates. Prevailing wage rates are set based on comparable wages for most workers with similar training and experience in the same kind of job within a geographic area. The rates are collected and published in schedules that set prevailing wage rates for particular projects in specific areas of the state.

Prevailing wage laws can be set by the federal, state, or local government. On June 6 2018, Michigan repealed the state prevailing wage law. This means that there is no state prevailing wage on projects that began after June 6, 2018. If a project had to pay prevailing wages before the repeal, the employer may still have to pay prevailing wages on that project. The repeal of the Michigan law has no impact on federal and local prevailing wage rules. If a project has federal funding, the employer may have to pay prevailing wages under federal law. Many cities and counties have prevailing wage ordinances for construction projects funded by local governments. These include Ann Arbor, Detroit, Lansing, and Saginaw.

Prevailing wage laws can be violated just like minimum wage laws. There are also common illegal schemes where employees are told to pay a percentage of their paychecks back to their employer. If you worked on a government project and have not been paid prevailing wage rates, you can file a complaint. The repeal of Michigan’s prevailing wage law means that you can no longer file a complaint with the Michigan Wage and Hour Program. Depending on your situation, you may be able to file a complaint with the U.S. Wage and Hour Division, a local municipality, or file a claim in court.

Living Wage Ordinances

Several Michigan cities, townships, and counties have adopted living wage ordinances and policies. Contractors and other businesses who receive economic assistance from these cities, townships, and counties must pay their employees a “living wage.” These ordinances vary, but they try to pay employees a wage that would allow them to live above the federal poverty level. Living wage rates are often adjusted annually. They are usually around $13 per hour for workers who receive employer health insurance and $15 per hour for those who do not.

In 2015, the Michigan Legislature passed a law that bans any new living wage ordinances or policies. Ordinances adopted before January 1, 2015 remain in effect and can be enforced. Municipalities with existing living wage ordinances include:

• Ann Arbor

• Eastpointe

• Ferndale

• Lansing

• Monroe

• Pittsfield Township

• Southgate

• Superior Township

• Taylor

• Warren

• Ypsilanti

• Ypsilanti Township

• Ingham County

• Macomb County

• Washtenaw County

Living wage ordinances are enforced through complaint procedures established by local governments. Typically, you file a complaint or grievance with a city or county agency. The agency then investigates the complaint. In some cases, complaints may be filed in court.

Common Violations

Minimum wage, overtime, prevailing wage, and living wage laws may be violated directly or indirectly. An example of a direct violation is if your employer pays you less than what is required by law. An example of an indirect violation is if you get the correct wage rate, but some of your work hours are not counted or the amount you take home is reduced below the legal rate by improper deductions or other required payments to your employer. To learn more about employer deductions, read What Can My Employer Deduct from My Paycheck?

Some common wage violations include:

• Failing to pay an employee for all hours worked

• Payment at an hourly rate below the required minimum wage

• Failing to pay required rates of pay for overtime hours worked

• Misclassifying workers as administrative staff, managers, independent contractors, or other categories exempt from overtime requirements

• Requiring employees to perform “off-the-clock” work, such as set-up and clean-up duties

• Taking improper deductions that reduce an employee’s wages below minimum wage

• Improperly charging employees for equipment, uniforms, cash register shortages, store losses, or other items

• Withholding pay for poor performance or as discipline

• Requiring tipped employees to share tips with staff who do not usually receive tips

• Failing to pay the difference when tips earned by tipped employees do not make minimum wage during a workweek

There may be others, too.

When Your Wage Rights Are Violated

If your employer paid you less than what you are owed, you have rights. If the amount you are owed is $6,500 or less, you can file a small claims suit under the FLSA and WOWA. To learn more about small claims lawsuits, read Taking a Small Claims Case to Court. If the amount is more than $6,500, you might be able to sue your employer in other state courts or federal court. To learn more about suing your employer for wages you are owed, read Filing a Wage Lawsuit in State or Federal Court.

You can also file a claim under the WOWA and the PWFBA with the Michigan Wage and Hour Program or a complaint under the FLSA with the U.S. Wage and Hour Division. To learn more about these processes, read Filing a Complaint with the Michigan Wage and Hour Program and Filing a Complaint with the U.S. Wage and Hour Division. 

When your claim involves federal, state, or local prevailing rates, where you file your complaint will depend on who funded the project. This could be the federal, state, or local government. On federally funded projects, complaints typically may be filed with the U.S. Wage and Hour Division or the federal department that funded the project. On state-funded projects, complaints may be filed with the Michigan Wage and Hour Program. On locally funded projects, you can file a complaint with a department within local government.

For local living wage rates, you can also typically file a complaint or grievance with the local government. The local prevailing wage or living wage ordinance usually tells you where you can file your complaint or grievance. You can usually find information on local ordinances through the local government’s website. Online resources such as Municode and American Legal Publishing offer free searchable databases of the ordinances of various Michigan communities.

Before filing, contact the department where you will file the complaint and find out if any specific forms are needed to file your complaint or grievance. If no department is listed in the ordinance, check with the following:

• Office of the (municipal) Auditor

• City or township Manager

• Human Rights Department, or

• The department that oversees the local government’s contracts

In some cases, living wage complaints may be filed in court.