Michigan Labor Laws for Salaried Employees

The federal Fair Labor Standards Act (FLSA) sets the minimum standard across the country for work conditions, including minimum wage and overtime laws. States have authority to strengthen the protections set out in the FLSA or to simply accept the federal standards.

Michigan labor laws do a little of both. They have a higher minimum hourly wage, rely on the FLSA for the definition of exemptions, and were the first state in the union to mandate sick leave for employees.

The Fair Labor Standards Act is intended to set minimum work conditions for employees both in the private sector and also those working for federal, state or local government agencies. Not every employee is covered, since some classes of workers are classified as "exempt" from the legal protections. Only nonexempt workers are covered.

Covered employees in every state can rely on the FLSA that establishes minimum wage and overtime pay, both when it kicks in and how to calculate it. While states are permitted to increase the protections in these areas from those offered by the federal legislation, an employee is entitled to rely on whichever standard offers greater protection.

In addition, states can enact employment laws on subjects not described in the FLSA that apply to employees in their states. For example, the FLSA does not guarantee a nonexempt employee the right to a paid vacation, but a state can require paid vacation time if it wishes. States must balance the need to protect employees with the need to attract businesses.

The federal minimum wage rate as of 2022 is $7.25 per hour. The amount is not set in stone and has been raised several times over the years, but Congress has not seen fit to raise this amount since it became effective on July 24, 2009. Since the cost of living has risen significantly since then, many states have enacted minimum wage laws that are higher than this amount.

This is the case with the state of Michigan. It has a minimum wage law that has been higher than the federal level for some years. It is called the Workforce Opportunity Wage Act, and applies to all private employers in the state with at least two employees. As of January 1, 2022, it went up again and currently is set at:

• $9.65 an hour for employees at or over age 18 in the private sector, but does not apply to those working for a government agency.
  
• $7.86 for employees who are 16 or 17 years old in the private sector.
• $3.52 an hour for tipped employees.

The rate for adults working in the private sector is $2.40 an hour greater than the federal minimum wage. Where an employee in the private sector is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage. Therefore, these Michigan nonexempt employees can count on a wage of at least $9.65 an hour.

In the years subsequent to 2022, the state minimum wage is scheduled to increase annually as long as the unemployment rate for Michigan for that year is 8.5 percent or greater. The scheduled increases are:

• January 1, 2023: $10.10
• January 1, 2024: $10.33
• January 1, 2025: $10.56
• January 1, 2026: $10.80
• January 1, 2027: $11.04
• January 1, 2028: $11.29
• January 1, 2029: $11.54
• January 1, 2030: $11.79
• January 1, 2031: $12.05

The Fair Labor Standards Act also contains mandatory overtime compensation for nonexempt workers who work over 40 hours in a workweek. The FLSA sets the minimum overtime rate at one and one-half times the regular hourly rate of pay of the employee. That means that if an employee regularly earns $10.00 an hour, they must be paid $15.00 per hour over 40 hours in a workweek.

Michigan generally accepts the federal law as the state law. It requires overtime for any hours over 40 worked by a nonexempt employee in a seven-day workweek. It sets the overtime pay at one and one-half times the regular hourly pay.

Many people have a misconception about what the FLSA says about workweeks. It does not set a maximum workweek at 40 hours or any other length of time. Employees over the age of 15 can be assigned to work any workweek that they and the employer agree to. And they are not automatically entitled to overtime for weekends or holidays.

Overtime kicks in on a workweek basis – seven consecutive 24-hour periods. If the worked hours exceed 40, the employee gets overtime.

Under federal law and Michigan law, certain categories of workers are "exempted" from the labor law protections. That narrows down the number of workers who can count on the minimum wage and overtime rules. However, it can be challenging to figure out who is covered and who is not.

Some types of workers are specifically excluded from the FLSA protections while others are covered by alternative labor laws specific to a profession. For most jobs, however, an individual is an exempt employee if they meet all of these requirements:

• Receive weekly pay of at least $684, or $35,568 per year

per year.
Receive a salary rather than get paid by the hour.
Perform exempt job duties.

The four general categories of exemptions from labor laws based on job duties are:

• Executive duties.
• Administrative duties.
  
• Professional duties.
  
• Outside sales duties.
  

The executive duties exemption could also be called a managerial exemption, since the person must manage a specific department or division of a business, including at least two full-time workers, and have the ability to hire, fire or demote workers.

Administrative employees are "white-collar" office workers who aren't hired to do manual work. Their jobs relate directly to the general operation of the company or its customers. This includes educational professionals if they oversee standards like a grading system, establishing curriculum or supervising the operation of a school.

Professionals can be either learned professionals or creative professionals. Learned professionals perform intellectual work and have pursued higher education to obtain their knowledge. Most employees with college degrees fit into this category, while creative professionals use their imagination or talent to perform an artistic or creative job.

Outside sales persons are workers who solicit or receive sales orders if they work away from the company office. Online or phone sales are usually not considered outside sales unless the contact is made to set up a personal sales call.