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A Better Partnership


May 2006
May 01, 2006

Michigan Minimum Wage Law Change

You probably knew that Governor Granholm recently signed a new law increasing the Michigan minimum wage to $6.95 per hour beginning October 1, 2006, with additional increases in 2007 and 2008. You may not know, however, that the new law will also dramatically alter overtime requirements for Michigan employees.

The federal Fair Labor Standards Act ("FLSA") applies to Michigan employers and determines which employees are to be paid overtime and which employees are "exempt" from overtime requirements. However, Michigan has its own Minimum Wage Law, and it contains fewer exemptions from overtime than the FLSA. The Michigan law contains a provision stating that it does not apply to employers covered by the FLSA so long as coverage under the FLSA would not result in a lower minimum wage than provided by the Michigan law. After the October 1, 2006, minimum wage increase, this will no longer be the case. The Michigan law, and its accompanying overtime exemptions, will apply to all Michigan employers.

What does this mean for a Michigan employer? It means that the following groups of Michigan employees, who are not currently eligible for overtime under the FLSA, will become eligible for overtime pay at time-and-a-half beginning October 1, 2006:

  • Outside sales employees
  • Highly compensated employees
  • Auto sales employees, auto mechanics and auto parts clerks
  • Computer professionals
  • Professionals paid on a fee basis
  • Interstate transportation employees
  • Home health care workers paid as domestics
  • Health care workers currently being paid under the 8/80 overtime method

This overtime eligibility appears to be unintended. But unless the Michigan legislature and Governor Granholm act to amend the law, employers will be required to comply with Michigan law, rather than the federal law, or risk litigation down the road.

If you have any questions regarding these new requirements, please contact a member of the WN&J Labor and Employment Group.


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