On February 21, 2024, Governor Whitmer signed Senate Bill 8 into law, which served to amend the Improved Workforce Opportunity Wage Act (“IWOWA”) on the same day the law was set to be reinstated. IWOWA and the amendments contained within Senate Bill 8 became effective immediately.
Regular Minimum Wage
- From February 21, 2025 through the remainder of the 2025 calendar year, minimum wage will remain at $12.48.
- In 2026, the minimum wage will be $13.73.
- In 2027, the minimum wage will be $15.00.
- After 2027, there will be adjustments for inflation in following years.
Tipped Minimum Wage
- Tipped minimum wage is $4.74 for the remainder of the 2025 calendar year.
- In 2026, the tipped minimum wage will increase to $5.49, 40% of minimum wage.
- In 2027, the tipped minimum wage will increase to $6.30, 42% of minimum wage.
- In 2028, the tipped minimum wage will increase to 44% of minimum wage.
- In 2029, the tipped minimum wage will increase to 46% of minimum wage.
- In 2030, the tipped minimum wage will increase to 48% of minimum wage.
- In 2031, the tipped minimum wage will increase to 50% of minimum wage.
- As of February 21, 2025, the maximum tip credit will be $7.74.
- In 2026, maximum tip credit will be $8.24.
- In 2027, maximum tip credit will be $8.70.
- In following years, the maximum tip credit will increase in accordance with the raise of the minimum wage.
Overview
- IWOWA, as amended by Senate Bill 8, will no longer phase out tip credits. Instead, it will follow the above schedule.
- The overtime requirements remained the same under IWOWA, nonexempt employees should receive payment of 1 – 1 ½ times their regular rate of pay for any hours worked over 40 in a 7 day workweek.
- The minimum salary compensation remains $684 per week, which amounts to $35,568 per year, for employes who are exempt from overtime requirements under the exemptions.
- IWOWA applies to employees who work in Michigan for employers that have 2, or more, employees that are at least 16 years of age.
- If an employer is subject to both the state and federal minimum hourly wage rate, they should follow the stricter standard of the two.
- If a new employee is less than 20 years of age, there is a training wage for new employees: $4.25 per hour in the first 90 calendar days fo employment.
- Tipped employees may be paid the amounts above if (1) they are informed of top provisions; (2) they receive and report tips; (3) the tips received in addition to the wages paid is equal to or more than the hourly minimum wage; and (4) if (3) is not met, the employer pays the difference.
- Employees can file a claim online, in person at the Department, or over the phone.
There is a poster requirement for IWOWA for employers to post in the office. A copy is available online or one can be requested from the Wage and Hour Division or the Department of Labor and Economic Opportunity. The poster and posting requirements can be found here: https://www.michigan.gov/leo/bureaus-agencies/ber/wage-and-hour/poster-wage-and-hour-posting-requirements-for-employers
The Department of Labor and Economic Opportunity maintains a website on IWOWA here: https://www.michigan.gov/leo/bureaus-agencies/ber/wage-and-hour/min-wage
It is important that all businesses are in compliance with IWOWA. If you have questions, please reach out to Melissa Demorest LeDuc at melissa@demolaw.com.
