As in many states, the legal landscape regarding overtime laws in Michigan is a mixture of state and federal regulations. Unlike other states, Michigan is in a limbo-like position of offering better protections than some states, but these state protections are in some regards more limited than what federal law provides. Please keep reading to learn about state and federal overtime laws in Michigan. If you are having difficulties with your employer due to misconduct like illegally denying overtime wages, get in touch with a Marquette wage and hour lawyer as soon as possible.
IWOWA and FLSA: State and Federal Overtime Regulations in Michigan
Two sets of legislation regulate work (including overtime work) in Michigan: the federal Fair Labor Standards Act (FLSA) as well as Michigan’s Improved Workforce Opportunity Act (IWOWA). A good chunk of the FLSA was codified into the later IWOWA.
Under the FLSA, the federal minimum wage is $7.25, while in 2023, Michigan’s state minimum wage increased from $10.10 to $10.23. (If IWOWA continues to be followed, by 2030 the legislation’s Section 408.934 affirms that the minimum wage should rise to $12.05.) FLSA and IWOWA interact such that IWOWA excludes from its own coverage employees who are covered under the FLSA, except when IWOWA’s state rate is more than the federal rate.
The FLSA has for decades indicated—and IWOWA later incorporated on the state level—that when an employee works more than 40 hours per week, they are entitled to overtime at 1.5 times the pay rate. While some states have a daily overtime limit, allowing you to collect overtime after working more than the indicated hours a day, Michigan is among the states that count overtime hours per week, such that once you have worked more than 40 hours in a week, you have a right to the overtime hourly rate. Michigan’s minimum wage is $10.33 per hour, so under both state and federal law, overtime pay would be $15.50. That said, employers do not have to pay 2 or 3 times the regular pay rate for employees working on holidays, unless the business has an employment agreement already specifying such.
Another important difference between the FLSA and IWOWA has to do with which employers are required to pay overtime at all. IWOWA indicates that an employer with 2 or more employees must pay overtime, whereas under the FLSA, regardless of how many or how few employees, any employer that has a gross income over $500,000 must pay overtime.
Finally, the IWOWA allows employees to receive overtime compensation as 1.5 times paid time off (PTO) in exchange for every overtime hour. To set this up, the employer and the employee’s collective bargaining representative must sign a written agreement.