The minimum hourly wage will also increase to $3.52 per hour for employees that regularly receive tips, a 14 cent increase from $3.38. Keep in mind, if an employee's tips plus his/her minimum hourly wage rate do not equal or exceed the minimum hourly wage, the employer must pay the difference to the employee.
For example: If Mike - a waiter - works a five hour shift, as a regular minimum wage employee, he would be paid $46.25 before taxes. If the tip credit is applied, Mike's hourly wage of $3.52 for five hours plus $20 of gratuity totals $37.20. This does not equal or exceed the minimum hourly wage, so his employer would have to pay the difference of $9.05.
Act 138 also allows Michigan employers to pay 85 percent of the minimum wage to 16 and 17 year-old employees. This rate will now be $7.86 per hour, exceeding the federal minimum wage of $7.25.
Review your hourly employees' wages and plan to increase their pay effective Jan. 1, 2018. Employers covered by state and federal minimum wage law should pay the higher rate.
To learn more, contact your Beene Garter professional at 616.235.5200.