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CCH® PAYROLL — 06/04/14

Michigan hourly wage will increase to $9.25 by 2018

Michigan’s minimum wage will increase the minimum hourly wage in step increases to reach $9.25 by 2018 and then, starting in 2019, tie future increases to the cost of living. The final version of S.B. 934 cleared the Senate by a vote of 316 to 34 on Monday, May 27; it was presented to the Governor that evening and approved moments later. An earlier version that would have raised the minimum wage to $9.20 by January 1, 2017 -- five cents an hour less but effective a year earlier than in the final bill -- cleared the Senate on May 15 by a 24-14 ballot. The House, however, made the changes to the bill that were ultimately agreed to by the Senate.

Specifically, Michigan’s current minimum hourly wage of $7.40 will increase to $8.15 on September 1, 2014; to $8.50 on January 1, 2016; to $8.90 on January 1, 2017; and finally to $9.25 on January 1, 2018.

On January 1, 2019, and thereafter, the minimum wage will be adjusted at the end of each calendar year to reflect the average annual percentage change in the consumer price index for the most recent five-year period for which data is available. The new rate is to be posted by February 1 of each year and will take effect on April 1 of the same year. The State Treasurer is charged with adjusting the minimum hourly wage each year, while the Wage and Hour Division of the Department of Licensing and Regulatory Affairs is to post the adjusted rate on its Internet website.

The annual increase, however, may not exceed 3.5 percent, and the adjustment will not take effect if the unemployment rate in Michigan is 8.5 percent or more for the preceding year.

Under the new minimum wage law, employers may pay employees under age 20 a training wage of $4.25 per hour for the first 90 days of employment.

Beginning September 1, 2014, the wages of tipped employees will increase from the current rate of $2.65 an hour to 38 percent of the newly established minimum hourly wage rates. (State of Michigan, Office of the Governor, Press Release, May 27, 2014, http://www.michigan.gov/snyder/0,4668,7-277--329347--,00.html; Act 138 (S.B. 934), L. 2014, http://www.legislature.mi.gov/documents/2013-2014/publicact/pdf/2014-PA-0138.pdf.)

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