What Are Overtime Laws in the State of Michigan?

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In light of recent legal challenges to Michigan minimum wage and paid sick leave requirements, many employers are reevaluating their policies to ensure compliance with all Michigan labor laws. In this article, we’ll explore current overtime laws in the state of Michigan to help your business remain aligned with state requirements and free of compliance concerns.

Overtime Requirements 

Michigan’s Improved Workforce Opportunity Wage Act, which covers state overtime protocols, requires that all non-exempt employees be paid 1.5x their standard hourly pay for any work exceeding 40 hours in a week. Although some states have established a daily overtime limit that provides overtime compensation for any work an employee completes past 8 hours a day, Michigan law does not set this limit, favoring a weekly threshold instead.

Michigan overtime requirements share many major similarities with Federal Fair Labor Standards Act (FLSA) policies, but there are some noteworthy distinctions you should keep in mind for your business or industry.

In Michigan, an employee is only eligible for overtime pay if they work for an employer with 2 or more employees. This differs from federal law, which sets standards that apply to any employer with a gross income of $500,000 or more, regardless of the business’ size or total workforce.

Additionally, Michigan employees can legally receive overtime compensation in the form of 1.5x paid time off (PTO) for every overtime hour worked. This arrangement requires a written agreement between the employer and the employee’s collecting bargaining representative. In Michigan, “comp” time is also permitted for government employees.

Excluding an existing contract that expressly offers this benefit, employers are not obligated to pay double or triple time to employees who work on holidays.

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Overtime Eligibility: Exempt vs. Non-Exempt Employees

In broad terms, most white-collar workers – executives, administrators, professionals, and elected officials – who earn $455 a week or more are not eligible for overtime compensation under FLSA and Michigan law. Other exempt categories include independent contractors, external salespeople, seasonal camp workers, under-18 childcare providers, as well as some agricultural/farm workers, live-in housekeepers, computer-related workers, and transportation workers.

Non-exempt employees generally include those who earn less than $455 weekly and occupy non-managerial, “blue-collar,” or manual labor positions. Michigan law also closely resembles FLSA policy in that certain job types are consistently eligible for overtime compensation, including but not limited to: police, firefighters, paramedics, firefighters, as well as paralegals and practical nurses. 

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Potential Penalties for Noncompliance

Noncompliance with Michigan state overtime laws can lead to some of the following consequences and more:

  • Repayment of employee(s) to compensate for unpaid overtime
  • Payment of liquidated (doubled) damages
  • Potential expansion of legal claims into a class action lawsuit
  • An array of legal fees and time spent in litigation

Employers should work to avoid common errors like misclassifying certain employees/employee types as “exempt” or “non-exempt.” It’s also important to remember that overtime applies retroactively, meaning that when an employer gives a bonus, they must modify the overtime rate across the entire year and compensate their employee accordingly; this can affect employers when paying or adjusting premium rates, as well.

Navigating Overtime Compliance and Michigan Labor Laws with Workforce PayHub

With all of these state and federal labor law considerations in mind, it’s crucial for Michigan businesses to have the support of a workforce management solution that integrates payroll, time & labor management, and human resources. Workforce PayHub offers expertise, software, and services that ensure your payroll operations are streamlined and your business remains fully compliant with all federal and state labor laws. Contact us today to start our collaboration.

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Eric Jones
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