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Michigan's Minimum Wage Will Increase 25%

By Anne-Marie V. Welch / Jun 02, 2014

On May 27, 2014, Michigan Governor Rick Snyder signed into law Public Act 138 of 2014 , known as the Workforce Opportunity Wage Act, which repeals and replaces the Michigan Minimum Wage Law of 1964.  The new Act will gradually raise the state's minimum hourly wage 25% from its present rate of $7.40 to $9.25 by 2018.  Lawmakers reasoned that the gradual increase will allow employers time to adjust to the higher labor costs.

Employers will be required to implement minimum wage increases for hourly employees according to the following schedule:

September 1, 2014

$8.15

January 1, 2016

$8.50

January 1, 2017

$8.90

January 1, 2018

$9.25

 

Beginning September 1, 2014, the Act increases the hourly minimum wage for workers who earn tips to 38% of the general minimum wage, from its current rate of $2.65 to $3.52 by 2018.

 

The Workforce Opportunity Wage Act lessens the need for future legislation to adjust the minimum wage.  Beginning in January 2019, each year the minimum wage will increase at the rate of inflation or 3.5%, whichever is lower.  Annual increases will only take effect, however, if the state's unemployment rate is below 8.5% in the previous year.

 

The new law sets the minimum wage well above the current federal minimum wage of $7.25, but not as high as in the other states who have also taken steps to increase their minimum wage this year.  At least six other states plus Washington, D.C., will have higher minimum wages than Michigan by 2018:

  1. Maryland ($10.10 by 2018)
  2. Minnesota ($9.50 by 2016 for large employers)
  3. Washington (currently $9.32)
  4. Connecticut ($10.10 by 2017)
  5. Hawaii ($10.10 by 2018)
  6. Maryland ($10.10 by 2018)
  7. Washington, D.C. ($11.50 by 2016)

A federal minimum wage increase to $10.10 is currently stalled in Congress.

 

According to the state Department of Technology, Management and Budget, this new law will impact 96,000 Michigan workers, or 3.8% of Michigan's hourly workers earning at or below the minimum wage in 2013.  This is slightly below the national average of 4.3% of hourly workers earning minimum wage.

 

Senate Majority Leader Randy Richardville admits that he introduced the bill in an effort to head off a November ballot measure vehemently opposed by restaurateurs and many other employers, which proposed to eliminate the tipped wage scale altogether and to raise the minimum wage for all workers even higher, to $10.10 an hour by 2017.  It is unclear if the new law will actually prevent the $10.10 measure from appearing on the November ballot. Raise Michigan, the labor and community organizers behind the ballot initiative, filed the requisite number of petition signatures in support of the ballot initiative by the filing deadline the day after Governor Snyder signed the bill into law.  Clark Hill will continue to provide updates on this matter as we learn more.

 

If you have questions about implementing the Workforce Opportunity Wage Act or any other labor or employment matter, please contact Anne-Marie Vercruysse Welch at 248.988.1810 or your Clark Hill attorney.