The minimum wage law in Michigan is changing rapidly. As of January 2026, the Michigan minimum wage increases to $13.73 per hour under Act 337 of 2018 Improved Workforce Opportunity Wage Act (IWOWA), which is $1.25 more than the 2025 rate. For tipped employees, the minimum wage rate is $5.49 in cash, which is 40 % of the full minimum wage rate ($13.73). Employees who are between 16 and 17 years of age are required to pay 85% of the full wage rate, which is $11.67 per hour, and the workers who are newly hired and under 20 are eligible for a training wage of $4.25 for the first 90 days. Employers must update payroll by 1 January 2026 and ensure that employees know the new rates.
Michigan Minimum Wage 2026
| Worker Type (2026) | Cash Wage |
|---|---|
| Standard Employees | $13.73 per hour |
| Tipped Employees | $5.49 per hour |
| Employees (16 to 17 years) | $11.67 per hour (85 % of the minimum wage rate) |
| Training Wage (Under 20) | $4.25 per hour |
- The above rates apply to any employee working in Michigan for employers with two or more employees.
- Workers who are below 16 years are excluded.
- Employers subject to both federal and Michigan minimum wage laws must follow the higher standard, especially when comparing the USA Minimum Wage Rate to Michigan’s higher state-mandated wage.
- Additional increases are scheduled: the wage will rise to $15.00 on January 1, 2027, and then adjust annually based on the Midwest Consumer Price Index (CPI), with a cap on the tipped wage percentage reaching 50 % by 2031.
What is the Minimum Wage Law in Michigan?
Michigan sets its minimum wage through the Improved Workforce Opportunity Wage Act (Act 337 of 2018), which requires annual increases and allows cost‑of‑living adjustments. In July 2024, the Michigan Supreme Court issued a ruling that would have ended the tip credit and required businesses to follow very strict paid leave rules if no changes were made. This would have greatly increased costs for restaurants and other employers.
After months of advocacy by the Michigan Restaurant & Lodging Association (MRLA), Michigan lawmakers passed bipartisan legislation to fix these issues. The bills were signed into law on February 21, 2025. As a result:
- The tip credit is saved, so tipped workers can still earn tips.
- The minimum wage continues to increase at a manageable pace.
- The paid leave rules were adjusted to be less rigid and easier for employers to manage.
Michigan Minimum Wage Schedule (2025 - 2030)
| Effective Date | Standard Minimum Wage | Tipped Wage Percentage |
|---|---|---|
| January 1, 2026 | $13.73 per hour | 40% of minimum wage |
| January 1, 2027 | $15.00 per hour | 42% of minimum wage |
| January 1, 2028 | Based on CPI-Midwest | 44% of minimum wage |
| January 1, 2029 | Based on CPI-Midwest | 46% of minimum wage |
| January 1, 2030 | Based on CPI-Midwest | 48% of minimum wage |
| After 2030 | Based on CPI-Midwest | Capped at 50% |
Historical Michigan Minimum Wage Rates
Michigan’s minimum wage has risen from $8.90 in 2012 to $13.73 in 2026, reflecting both legislative increases and cost‑of‑living adjustments. Major jumps occurred in 2014 (to $8.15), 2018 ($9.25), and 2023 ($10.10). The COVID‑19 recession triggered the 8.5 % unemployment pause, keeping the wage at $9.65 in 2020–2021.
| Year | Michigan Minimum Wage |
|---|---|
| 2026 | $13.73 per hour |
| 2025 | $12.48 per hour |
| 2024 | $10.33 per hour |
| 2023 | $10.10 per hour |
| 2022 | $9.87 per hour |
| 2020 - 2021 | $9.65 per hour |
| 2019 | $9.45 per hour |
| 2018 | $9.25 per hour |
| 2017 | $8.90 per hour |
Tipped Employee Wage Rules in Michigan
Michigan allows employers to take a tip credit equal to 40 % of the minimum wage in 2026. This means employers may pay $5.49 per hour in cash, provided the employee’s reported tips bring their total earnings to at least $13.73. To claim the credit, employers must inform employees, track and report tips, and pay any shortfall when tips do not meet the minimum. The tip credit percentage will rise gradually to 50 % by 2031.
Conditions Required for Using the Tip Credit
Michigan Department of Labor and Economic Opportunity (LEO) outlines specific conditions to apply the tip credit and pay a sub‑minimum cash wage under Michigan’s Minimum Wage Law:
- Notification: Employers must inform tipped employees of the tip credit provisions.
- Tip Reporting: Employees must receive and report tips; they must sign a written tip statement before the paycheck is issued.
- Minimum Earnings: Tips plus cash wages must equal or exceed the full minimum wage; otherwise, the employer pays the shortfall.
- Voluntary Tip Pooling: Under Michigan law, tip pooling must be voluntary. Employees may share gratuities with co‑workers but cannot be coerced, and refusal cannot affect employment. Employees must be allowed to cancel participation without reprisal, and managers or supervisors cannot share in the pool.
- Deduction Consent: Any deduction from wages (including for credit card processing fees or tip pool administration) requires an employee’s free, written consent and must not reduce the employee’s pay below the full minimum wage.
Overtime Rules Under Michigan Law
Non‑exempt employees in Michigan must receive 1.5 times their regular rate of pay for hours worked beyond 40 in a workweek. Michigan follows the federal workweek standard; daily overtime is not required. Salaried employees are only exempt if they meet both salary thresholds and the duties tests for executive, administrative, or professional work. Agricultural labor, certain amusement workers, and domestic service employees are excluded, but employers should verify whether federal overtime rules still apply.
Who is exempt?
Under Michigan’s Minimum Wage and federal law, several categories of workers may be exempt from overtime:
- Executive, administrative, and professional (EAP) employees who perform high‑level duties and earn at least the required salary.
- Certain domestic service employees.
- Amusement or recreational establishments operating for not more than seven months a year.
- Agricultural employees working on a family farm.
Salaried employees misclassified as exempt may sue or file complaints to recover unpaid overtime and equal liquidated damages.
Michigan City or Local Minimum Wage Laws
Michigan does not allow local governments to set their own minimum wage. In 2015, the state enacted a preemption law (Mich. Comp. Laws § 123.1385) prohibiting municipalities from establishing minimum wages higher than the state rate. The Economic Policy Institute notes that Michigan’s preemption statute effectively blocks cities from raising local wages or enacting more generous labor standards. Therefore, employers need only comply with the statewide rate.
Employer Posting & Notice Requirements in Michigan
To meet Michigan and federal workplace posting requirements, employers must conspicuously post all required labor law posters in a location where employees can easily see and read them, such as a break room, near time clocks, or other common work areas accessible to all workers.
Michigan Labor Law Poster Requirements:
- Employment Security Act
- Discrimination
- Whistleblowers Protection Act
- OSHA Safety and Health
- OSHA - SDS #2105 / #2106
- General Requirements, Minimum Wage, and Overtime
- Unemployment Compensation
- Workers' Disability Compensation
- Paid Medical Leave Act
- Resources for Michigan Veterans
In addition to the state labor law poster requirement, one should also follow federal labor laws to remain compliant. Required Federal Labor Law Posters:
- EEOC "Know Your Rights" Notice
- Federal Minimum Wage Notice
- Employee Polygraph Protection Notice
- Family and Medical Leave Act Notice (download only where required)
- USERRA Rights and Benefits Notice
- Payday Notice (Meets notification requirements)
- IRS EITC / Notice 797 / W-4 Notice (Meets notification requirements)
- Employee "Right to Know" Notice
- USCIS Discrimination Notice
What are the Penalties for Minimum Wage Violations in Michigan?
Michigan law strictly enforces wage protections, and 408.419 violation act explains the penalties employers face for failing to pay the required minimum wage or overtime, including back pay, double damages, and civil fines.
| Violation | Consequence |
|---|---|
| Failure to pay minimum wage or required overtime | The affected employee may recover unpaid wages plus an equal amount as liquidated damages, along with court costs and reasonable attorney fees |
| Employer violates the Workforce Opportunity Wage Act | The affected employee may file a civil lawsuit within 3 years of the violation or file a claim with the commissioner for investigation |
| Employer fails to voluntarily comply after investigation | If the commissioner finds reasonable cause and voluntary compliance is not achieved, the commissioner is required to file a civil action on behalf of affected employees |
| Failure to pay minimum wage or improper use of compensatory time under Section 4a | The employer may be subject to a civil fine of up to 1,000 dollars in addition to civil liability |
How Employees File a Wage Complaint in Michigan
Employees who believe they were not paid minimum wage, overtime, wages, fringe benefits, or paid medical leave may file a wage complaint with the State of Michigan. Complaints for paid medical leave violations must be filed within 6 months of the alleged violation. Complaints for unpaid wages or fringe benefits must be filed within 12 months. Minimum wage or overtime complaints may be filed up to 3 years from the date of the violation.
Steps to File a Complaint
- Gather Documentation: Collect pay stubs, work schedules, and any records related to wages, overtime, fringe benefits, or paid medical leave.
- File the Complaint Online or by Form: Submit the Online Wage and Benefit Complaint Form or download and complete the PDF version of the form.
- Provide Required Details: Include employer information, dates worked, hours, wages paid, and a description of the alleged violation.
- Submit within the Deadline: Ensure the complaint is filed within the applicable time limit based on the type of violation.
Employees are encouraged to file promptly to avoid missing statutory filing deadlines.
Michigan Employer Compliance Checklist (2026)
Staying compliant requires more than simply paying the hourly rate. Use this checklist to prepare your business for 2026:
- Update payroll to reflect the $13.73 minimum wage and adjust tipped, youth and training wages.
- Communicate wage changes to employees in writing, including tip credit rules and any voluntary tip pooling policies.
- Verify that salaried employees meet both duties and salary tests; adjust pay or reclassify as needed.
- Calculate overtime accurately and pay 1.5× the regular rate after 40 hours.
- Post updated labor law updates, Earned Sick Time Act notice, youth employment poster, and required federal posters.
- Maintain payroll, tip statements, and overtime records for at least three years, as required by both state and federal law.
- Train supervisors on wage requirements, tip credit rules, and anti‑retaliation obligations.
- Audit your pay practices annually or subscribe to a workplace compliance subscription service to receive automatic updates on labor laws and poster changes.
Conclusion
Both employers and employees will be impacted by changes to Michigan Minimum Wage 2026 and Overtime laws. Starting January 1st, 2026, the minimum wage for most workers will rise to at least $13.73/hr. There are also special rules regarding tipped employees, youth workers, and training wages. The Michigan minimum wage 2026 has enacted a process for workers to recover unpaid wages and established significant penalties for employers who fail to comply with the law. The best ways for both employers and employees to ensure they comply with Michigan's Minimum Wage Law are to keep accurate records, post required notices, and update payroll on time.
FAQs
Will Michigan’s minimum wage increase in 2026?
Yes. Effective January 1, 2026, the minimum wage for Michigan will be $13.73 per hour. For employees who receive tipped wages, there is a provision that allows for a cash wage of $5.49 per hour, provided the amount of tips received will make up for the difference between the cash wage and the minimum wage. A minor employee (ages 16-17 years) may be paid at 85% of the minimum wage, which is currently $11.67 per hour