NEW LAW: Michigan To Incrementally Increase Minimum Wage to $12.00 Per Hour

The Michigan Legislature recently adopted the Improved Workforce Opportunity Wage Act. This law, which was scheduled to be a ballot initiative (the Michigan Minimum wage Initiative) in the November 2018 election, will incrementally increase Michigan’s minimum wage up to $12.00 per hour in accordance with the following schedule:

  • When the law takes effect (~April 1, 2019*): $10.00 per hour
  • January 1, 2020: $10.65 per hour
  • January 1, 2021: $11.35 per hour
  • January 1, 2022: $12.00 per hour

Beginning in October 2022, the state treasurer will calculate an adjusted minimum wage rate, which will increase based on the rate of inflation and take effect on January 1st of the next year.

The new law also phases out the tip credit provided to employers of tipped employees by January 1, 2024 in accordance with the following schedule:

  • When the law takes effect (~April 1, 2019*): 48% of minimum wage ($4.80 per hour)
  • January 1, 2020: 60% of minimum wage ($6.39 per hour)
  • January 1, 2021: 70% of minimum wage ($7.95 per hour)
  • January 1, 2022: 80% of minimum wage ($9.60 per hour)
  • January 1, 2023: 90% of minimum wage ($10.80 per hour)**
  • January 1, 2024: Tip credit is eliminated

It is recommended that Michigan employers prepare for this minimum wage increase.

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*  The ballot initiative would have the new minimum wage going into effect on January 1, 2019.  However, since this measure was not adopted by the Michigan voters, under Michigan law, this law will take effect 90 days after the current legislative session ends (which is currently scheduled for December 31, 2018). Therefore, the effective date should be around April 1, 2019, unless the Legislature adjourns earlier than expected.

** Estimated based on the assumption that there is no increase in minimum wage in 2023