VIEWpoint Issue 2 | 2018
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VIEWpoint Issue 3 | 2017
Michigan Sales Tax Gets Amendment with Purchaser Relief Provision
Third Quarter 2018 Market Update
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Effective Jan. 1, 2018, Michigan’s workers can now expect to see an increase in the minimum wage rate from $8.90 to $9.25 reflected in their paychecks as a result of the final scheduled increase of the Workforce Opportunity Wage Act (WOWA/Act 138) of 2014.
Going into effect on May 27, 2014, WOWA replaced the Michigan Minimum Wage and Overtime Act (Act 154). Applying to all Michigan employers with two or more employees aged 16 and older, the legislation established a gradual 25 percent increase of the minimum wage each year throughout a five year span. Additionally, WOWA allows employers to pay 85 percent of the minimum hourly wage rate to employees aged 16 and 17 – rising from $7.57 in 2017 to now $7.86. Newly hired employees 16 to 19 years old now have an hourly training wage rate of $4.25 for the first 90 days of employment.
If you have employees who regularly receive gratuities, employers are able to take a tip credit on the state minimum wage rate under certain conditions outlined below. In addition, these employees may be paid 38 percent of Michigan’s minimum wage now resulting in a minimum hourly rate of $3.52.
Based on Michigan’s Department of Licensing and Regulatory Affairs (LARA), to take a tip credit on the state minimum wage rate, employers must ensure the following conditions are met:
If you have employees covered by the overtime provisions of WOWA, you must pay one and a half times their regular rate of pay for all hours worked past 40 in a work week.
With 2018 marking the final increase of WOWA, any future adjustments after this year will not exceed 3.5 percent annually. Until then, employers are required by law to post the Michigan Workforce Opportunity Wage Act poster in the workplace found on LARA’s website. If you need further clarification on the legislation or have questions, Doeren Mayhew’s team of CPAs and advisors stand ready to assist. Contact us today!
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