Employers in Michigan need to understand two key laws when it comes to processing payroll. These laws cover topics such as minimum wage, overtime, payroll deductions, pay stub requirements, pay methods, schedules, and more.
Here is everything you need to know about processing payroll in Michigan.
Michigan Payroll Laws
Michigan employers should review the following laws and ensure that they review their payroll processes to ensure compliance:
- Improved Workforce Opportunity Wage Act (IWOWA) - The law applies to all employers with at least 2 employees 16 years of age or older and covers topics such as minimum wage, overtime, and equal pay.
- Payment of Wages and Fringe Benefits Act (PWFBA) - The law generally covers all employees and covers topics such as deductions, pay stubs, pay methods, wage schedules, and final pay.
Minimum Wage
Michigan minimum wage includes several rates for different types of employees, including:
- Certain tipped workers
- Minors
- Trainees
However, the standard minimum wage rate in Michigan is currently $13.73 per hour as of January 1st, 2026, which applies to all employers with at least 2 employees who are 16 years of age or older. The standard minimum wage rate will increase again on January 1st, 2027, to $15.00 per hour.
Check out this article to learn more about the other Michigan-specific minimum wage rates.
Overtime in Michigan
Employees covered by the IWOWA are entitled to at least one and a half times their normal pay rate for hours worked over 40 in a workweek. However, there are certain exceptions:
- Employees exempt from the minimum wage provisions of the FLSA
- Professional, administrative, or executive employees
- Elected officials and political appointees
- Employees of amusement and recreational establishments operating less than 7 months of the year
- Agricultural employees
- Any employee not subject to Michigan minimum wage provisions
Employees exempt from the requirements of the IWOWA may still be subject to Fair Labor Standards Act (FLSA) overtime rules.
Equal Pay in Michigan
Michigan employers are required to compensate employees equally, regardless of gender, for equal work on jobs (requiring equal skill, effort, and responsibility performed under similar working conditions).
Any disparities in compensation between two employees of a different sex must be due to a seniority system, merit system, another system measuring earnings on the basis of quantity or quality of production, or any other differential other than sex.
Requirements for Processing Payroll in Michigan
While the above requirements cover how much employees must be paid in Michigan, the requirements of the PWFBA relate more to the physical act of processing payroll.
Here is what employers need to consider:
Pay Stub Requirements
First, employers in Michigan are required to provide employees with a "retainable pay statement", otherwise more commonly referred to as pay stubs.
These pay stubs must include the following information:
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Hours worked
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Gross wages paid
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An itemization of deductions
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The dates for which the wages are paid
Paycheck Delivery Methods
Employers are also required to use one of the following methods to deliver paychecks to employees:
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Direct deposit
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Cash
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Check
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Money order
Payroll Schedule Requirements
Lastly, in addition to delivery methods and pay stubs, employers are required to adhere to one of the following schedules for paying employees:
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Weekly
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Bi-weekly
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Semi-monthly
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Monthly
Final Paychecks
In the event of a terminated employee, employers must deliver final paychecks on the next regularly scheduled payday for the last pay period the employee worked before quitting or otherwise being terminated.
Employers are not required to pay out fringe benefits. However, employers are required to honor any written contract or written policy established regarding the payment of unused fringe benefits.
Payroll Deductions in Michigan
The PWFBA also establishes requirements regarding legally authorized, voluntarily agreed-upon payroll deductions.
Common types of payroll deductions in Michigan include:
- Income tax withholdings
- Social Security and Medicare taxes
- Certain meal, housing, and transportation expenses
- Debts owed to the employer, like for pay advances, loans, or misappropriated funds
- Court-ordered wage garnishments
- Debts owed to the government
- Child support and alimony
Employers may also, under certain conditions, deduct for overpayments of wages or fringe benefits due to mathematical or typographical errors.
Frequently Asked Questions (FAQ)
Here are some common questions regarding Michigan payroll:
What laws govern payroll in Michigan?
Two key laws govern payroll requirements in Michigan: the Improved Workforce Opportunity Wage Act (IWOWA) and the Payment of Wages and Fringe Benefits Act (PWFBA). The IWOWA addresses minimum wage, overtime, and equal pay, while the PWFBA covers deductions, pay stubs, payment methods, payroll schedules, and final pay.
What is the minimum wage in Michigan?
As of January 1, 2026, Michigan’s standard minimum wage is $13.73 per hour for employers with at least two employees who are 16 years of age or older. The standard rate is scheduled to increase to $15.00 per hour on January 1, 2027.
What are Michigan’s overtime requirements?
Employees covered by the IWOWA are generally entitled to at least 1.5 times their normal rate of pay for hours worked over 40 in a workweek. Certain employees are exempt from these requirements, although they may still be subject to federal FLSA overtime rules.
What information must be included on a Michigan pay stub?
Michigan employers must provide employees with a retainable pay statement that includes hours worked, gross wages paid, an itemization of deductions, and the dates for which the wages are being paid.
How can employers pay employees in Michigan?
Employers may deliver employee wages through direct deposit, cash, check, or money order.
How often must employees be paid in Michigan?
Michigan employers must follow a weekly, bi-weekly, semi-monthly, or monthly payroll schedule.
When is a terminated employee’s final paycheck due in Michigan?
An employee who quits or is terminated must generally receive their final paycheck on the next regularly scheduled payday for the last pay period they worked.
What payroll deductions are allowed in Michigan?
Permitted deductions can include income tax withholding, Social Security and Medicare taxes, certain meal, housing, and transportation expenses, debts owed to the employer, court-ordered garnishments, government debts, and child support or alimony. Under certain conditions, employers may also deduct wage or fringe-benefit overpayments caused by mathematical or typographical errors.
Get Help with Michigan Payroll
If you are struggling to maintain compliance with Michigan payroll requirements, having trouble managing compensation, or experiencing other payroll-related challenges in Michigan, it may be time to reach out to a local Michigan payroll company with expertise in your area.
Contact us today to learn more. Or, if you are looking for additional Michigan State Resources, check out this page.
