© 2025 American Payroll Institute, Inc.
March 10, 2025 Volume 27 Issue 5
Michigan Amends Minimum Wage and Paid Sick Leave Laws
On February 21, 2025, amendments to minimum wage,
tip credit, and paid sick leave (PSL) laws took effect in
Michigan [S.B. 8, L. 2025 H.B. 4002, L. 2025]. Changes were
scheduled to take effect due to a state Supreme Court
decision in 2024. However, on the same day these changes
were to begin, the governor signed two new bills that
amended those requirements, effective immediately.
Minimum wage and tip credit changes
Minimum wage. Effective February 21, 2025, the
minimum wage increased to $12.48 per hour from $10.56
per hour (this updates The Payroll Source®, §2.11-1). Effective
January 1, 2026, the minimum wage will increase to $13.73
per hour (effective January 1, 2027, $15 per hour effective
January 1, 2028, adjusted annually for inflation). The
Michigan Department of Labor and Economic Opportunity
has published an updated poster with information on the
general requirements for minimum wage and overtime.
Tip credit. Effective February 21, 2025, the tip credit
increased to $7.74 per hour from $6.55 per hour (this
updates The Payroll Source®, §2.11-2). Effective January 1,
2026, the tip credit will increase to $8.24 per hour (effective
January 1, 2027, $8.70 per hour effective January 1, 2028,
56% of the minimum wage effective January 1, 2029, 54%
of the minimum wage effective January 1, 2030, 52% of
the minimum wage effective January 1, 2031, 50% of the
minimum wage).
Effective February 21, 2025, the minimum cash wage
will increase to $4.74 per hour from $4.01 per hour. Effective
January 1, 2026, the minimum cash wage will increase to
$5.49 per hour (effective January 1, 2027, $6.30 per hour
effective January 1, 2028, 44% of the minimum wage
effective January 1, 2029, 46% of the minimum wage
effective January 1, 2030, 48% of the minimum wage
effective January 1, 2031, 50% of the minimum wage).
Penalties. Employers may be subject to a civil fine of
up to $1,000 for failure to pay minimum wage or overtime.
Employers that fail to pay minimum wage to tipped
employees may be subject to a civil fine of up to $2,500.
PSL changes
Covered employees, employers. Effective, February
21, 2025, all employees are covered with the following
exceptions: employees of the U.S. federal government,
unpaid interns and trainees, and employees subject to an
employee policy where the employee schedules their own
working hours. The policy must prohibit the employer
from taking any adverse action against the worker for not
scheduling a minimum number of work hours.
Employers that employ one or more covered employees
are covered. An employer is considered a small business if
it employs 10 or fewer employees during a given week. An
employer is no longer a small business if it employed more
than 10 employees during 20 or more calendar weeks in
the current or previous calendar year. The employee count
includes full-time, part-time, and temporary employees.
Accrual. Effective February 21, 2025, employees accrue
1 hour of PSL for every 30 hours worked. Overtime exempt
employees are assumed to work the lesser of 40 hours per
week or their normal workweek. Small businesses are not
required to allow, calculate, or track accrual until October
1, 2025. Employees may accrue up to 72 hours of PSL per
year unless the employer allows more. For small businesses,
employees may accrue up to 40 hours of PSL per year.
Employees may not use more PSL in a single year than they
would be able to accrue unless an employer allows a higher
limit.
Front loading. As an alternative to tracking and allowing
employee accrual of PSL, employers may provide the entire
amount of yearly PSL (72 hours for most businesses and 40
hours for small businesses) at the beginning of the year.
The front-loaded amount must be available for immediate
use. For part-time employees, the employee may front load
the amount expected to accrue based on the employee’s
expected yearly hours worked. The employer must provide
written notice to the employee of their expected amount of
work hours for the year at the time of hire. If the employee
works more than the projected amount, the employer must
provide additional PSL as the employee accrues more hours.
Carryover. Employees carry over any earned but
unused PSL from 1 year to the next up to their yearly accrual
limit.
Benefits. Employees may use PSL as it accrues. For
employees hired after February 21, 2025, employers may
require the employee to wait 120 calendar days after
the commencement of employment before using PSL.
Employees must be paid the greater of their normal hourly
wage/base wage or the minimum wage. Employers are not
required to include overtime pay, holiday pay, bonuses,
commissions, supplemental pay, piece-rate pay, tips, or
gratuities in the calculation of an employee’s normal hourly
wage/base pay. Employees may use PSL in the lesser of
1-hour increments or the smallest amount tracked by the
employer for other time off.
Employer requirements, restrictions. Employees can
be required to give notice of their need for PSL up to 7
days in advance if the need for leave is foreseeable. If not
foreseeable, then employees may be required to give notice
as soon as practicable. Employers must provide employees
with a written copy of their policy on how to provide notice.
March 10, 2025 Volume 27 Issue 5
Michigan Amends Minimum Wage and Paid Sick Leave Laws
On February 21, 2025, amendments to minimum wage,
tip credit, and paid sick leave (PSL) laws took effect in
Michigan [S.B. 8, L. 2025 H.B. 4002, L. 2025]. Changes were
scheduled to take effect due to a state Supreme Court
decision in 2024. However, on the same day these changes
were to begin, the governor signed two new bills that
amended those requirements, effective immediately.
Minimum wage and tip credit changes
Minimum wage. Effective February 21, 2025, the
minimum wage increased to $12.48 per hour from $10.56
per hour (this updates The Payroll Source®, §2.11-1). Effective
January 1, 2026, the minimum wage will increase to $13.73
per hour (effective January 1, 2027, $15 per hour effective
January 1, 2028, adjusted annually for inflation). The
Michigan Department of Labor and Economic Opportunity
has published an updated poster with information on the
general requirements for minimum wage and overtime.
Tip credit. Effective February 21, 2025, the tip credit
increased to $7.74 per hour from $6.55 per hour (this
updates The Payroll Source®, §2.11-2). Effective January 1,
2026, the tip credit will increase to $8.24 per hour (effective
January 1, 2027, $8.70 per hour effective January 1, 2028,
56% of the minimum wage effective January 1, 2029, 54%
of the minimum wage effective January 1, 2030, 52% of
the minimum wage effective January 1, 2031, 50% of the
minimum wage).
Effective February 21, 2025, the minimum cash wage
will increase to $4.74 per hour from $4.01 per hour. Effective
January 1, 2026, the minimum cash wage will increase to
$5.49 per hour (effective January 1, 2027, $6.30 per hour
effective January 1, 2028, 44% of the minimum wage
effective January 1, 2029, 46% of the minimum wage
effective January 1, 2030, 48% of the minimum wage
effective January 1, 2031, 50% of the minimum wage).
Penalties. Employers may be subject to a civil fine of
up to $1,000 for failure to pay minimum wage or overtime.
Employers that fail to pay minimum wage to tipped
employees may be subject to a civil fine of up to $2,500.
PSL changes
Covered employees, employers. Effective, February
21, 2025, all employees are covered with the following
exceptions: employees of the U.S. federal government,
unpaid interns and trainees, and employees subject to an
employee policy where the employee schedules their own
working hours. The policy must prohibit the employer
from taking any adverse action against the worker for not
scheduling a minimum number of work hours.
Employers that employ one or more covered employees
are covered. An employer is considered a small business if
it employs 10 or fewer employees during a given week. An
employer is no longer a small business if it employed more
than 10 employees during 20 or more calendar weeks in
the current or previous calendar year. The employee count
includes full-time, part-time, and temporary employees.
Accrual. Effective February 21, 2025, employees accrue
1 hour of PSL for every 30 hours worked. Overtime exempt
employees are assumed to work the lesser of 40 hours per
week or their normal workweek. Small businesses are not
required to allow, calculate, or track accrual until October
1, 2025. Employees may accrue up to 72 hours of PSL per
year unless the employer allows more. For small businesses,
employees may accrue up to 40 hours of PSL per year.
Employees may not use more PSL in a single year than they
would be able to accrue unless an employer allows a higher
limit.
Front loading. As an alternative to tracking and allowing
employee accrual of PSL, employers may provide the entire
amount of yearly PSL (72 hours for most businesses and 40
hours for small businesses) at the beginning of the year.
The front-loaded amount must be available for immediate
use. For part-time employees, the employee may front load
the amount expected to accrue based on the employee’s
expected yearly hours worked. The employer must provide
written notice to the employee of their expected amount of
work hours for the year at the time of hire. If the employee
works more than the projected amount, the employer must
provide additional PSL as the employee accrues more hours.
Carryover. Employees carry over any earned but
unused PSL from 1 year to the next up to their yearly accrual
limit.
Benefits. Employees may use PSL as it accrues. For
employees hired after February 21, 2025, employers may
require the employee to wait 120 calendar days after
the commencement of employment before using PSL.
Employees must be paid the greater of their normal hourly
wage/base wage or the minimum wage. Employers are not
required to include overtime pay, holiday pay, bonuses,
commissions, supplemental pay, piece-rate pay, tips, or
gratuities in the calculation of an employee’s normal hourly
wage/base pay. Employees may use PSL in the lesser of
1-hour increments or the smallest amount tracked by the
employer for other time off.
Employer requirements, restrictions. Employees can
be required to give notice of their need for PSL up to 7
days in advance if the need for leave is foreseeable. If not
foreseeable, then employees may be required to give notice
as soon as practicable. Employers must provide employees
with a written copy of their policy on how to provide notice.
