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A Better Partnership

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Jun 2006
15
June 15, 2006

Minimum Wage Update

The Problem

As almost everyone knows, Governor Granholm recently signed legislation that will increase the Michigan minimum hourly wage starting this October. Many are concerned that this increase will have the unintended effect of eliminating some of the overtime pay exemptions that employers have relied upon under federal law. These concerns have sparked a flurry of activity in Lansing in an attempt to ensure that the higher state minimum wage does not also expose Michigan employers to potentially significant overtime liability for employees who currently are not eligible for overtime pay.

Proposed Legislation

Based on conversations we have had with legislators and lobbyists in Lansing, we anticipate that legislation will be introduced sometime in the next two weeks that will, if enacted, head off this potential overtime issue. There are currently two versions of the legislation being considered. A coalition of employers and associations, led by the Michigan Chamber of Commerce, has created one version. Representative Huizenga (R-Ottawa County) has indicated that he will introduce this version. Warner Norcross & Judd and other interested persons have reviewed this version and agree that it would fix the problem. Representative Fulton Sheen (R-Allegan County) has drafted a different version. Unfortunately, this version is somewhat less clear.

Considering the broad support behind the coalition version, it is likely that the House Republicans will decide to move on that version.

Political Issues

The Republican leadership desires to pass the legislation as soon as possible, but it will probably first need to generate some bipartisan support. Unfortunately, certain Democrats appear to be less eager to address the issue before the November election. As a result, although legislation may be passed by the House before the summer break, it is unlikely that both the House and Senate will pass remedial legislation before the break, which begins on July 1. If the Republicans can generate enough bipartisan support, it is more likely that the legislature will pass the corrective legislation upon returning to session in September. There are no guarantees, however, that the Republicans will receive the necessary support to pass any remedial legislation by October 1, if at all.

Should legislation pass the House and Senate, there is still another hurdle. It is possible, although unlikely, that the Governor could veto any such legislation. This veto could be overridden only by a vote of 67% of both legislative houses or by a citizen's initiative (such as the current initiative to override the Governor's veto of the single business tax repeal). We will monitor the political atmosphere surrounding this issue as it continues through the legislative process. If you have a relationship with any Michigan legislator, especially Democratic legislators, it would be helpful for you to let them know that you believe this to be an important issue that should be addressed to help Michigan retain and attract jobs.

If you have questions about minimum wage issues or any other labor or employment matter, please let me know or contact any member of our Labor and Employment Law Practice Group.

 

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