| Update Applicable to: | Effective date |
| All employers | January 1, 2025 – 1st Update February 21, 2025 – 2nd Update February 21, 2026 and Onward – Follow Schedule |
What happened?
On October 1, 2024, the Michigan Labor and Economic Opportunity (LEO) agency released the 2025 minimum wage schedule.
Quick Summary
- The Michigan Supreme Court ruled that the Legislature’s strategy to avoid ballot initiatives for minimum wage and paid sick time was unconstitutional, leading to clarifications on future wage rates. As a result, Michigan’s minimum wage will increase twice in 2025, on January 1 and February 21, following the court’s ruling.
What are the details?
Background:
- On July 31, 2024, the Michigan Supreme Court declared that the Legislature’s adopt-and-amend approach, designed to bypass ballot initiatives for minimum wage and paid sick time, was unconstitutional. This ruling has raised some questions among employers.
- On September 18, 2024, responding to a request from the State of Michigan and its attorney general, the Michigan Supreme Court provided clarification on future minimum wage rates and minimum cash wage rates for tip-credit employees, based on a previous opinion.
Key Points:
- Michigan’s minimum wage is scheduled to increase twice in early 2025. On January 1, 2025, the minimum wage will rise from $10.33 to $10.56 per hour, following the usual rate increase schedule. On February 21, 2025, it will increase again to $12.48 per hour.
- This is part of a broader plan to gradually raise the minimum wage to $14.97 by February 21, 2028.
Minimum Hourly Wage Rate (Effective Jan. 1 – Feb. 20, 2025):
- Minimum wage: $10.56 per hour
- Minors under 18: $8.98 per hour (85% rate)
- Tipped employees: $4.01 per hour
- Training wage: $4.25 per hour (for newly hired employees under 20 for their first 90 days)
- For additional information, please see the “Minimum Wage Calendar Increase Table” below.
Tipped Employees:
- Effective Feb. 21, 2025: 48% of the minimum wage
- Effective Feb. 21, 2026: 60% of the minimum wage
- Effective Feb. 21, 2027: 70% of the minimum wage
- Effective Feb. 21, 2028: 80% of the minimum wage
- Effective Feb. 21, 2029: 90% of the minimum wage
- Effective Feb. 21, 2030, and thereafter: 100% of the minimum wage
| Minimum Wage Calendar Increase | ||||
| Effective Date | Minimum Hourly Wage Rate | Tipped Employee | 85%** Rate | |
| Minimum Hourly Rate | Reported Average Hourly Tips | |||
| February 21, 2025 | $12.48 | $5.99 | $6.49 | $10.61 |
| February 21, 2026 | $13.29 | $7.97 | $5.32 | $11.30 |
| February 21, 2027 | $14.16 | $9.91 | $4.25 | $12.04 |
| February 21, 2028 | $14.97 | $11.98 | $2.99 | $12.72 |
| The minimum hourly wage rate of an employee eligible to be considered tipped employee shall be 48% of the minimum hourly wage rate effective February 21, 2025; beginning February 21, 2026, it shall be 60% of the minimum hourly wage rate; beginning February 21,2027, it shall be 70% of the minimum hourly wage rate; beginning February 21, 2028, it shall be 80% of the minimum hourly wage rate; beginning February 21, 2029, it shall be 90% of the minimum hourly wage rate; and beginning February 21, 2030 and thereafter, it shall be 100% of the minimum hourly wage rate. | ||||
Business Considerations
- Employers should review and update their payroll systems to ensure compliance with the new minimum wage rates. Employers should monitor the increases in 2025 on both dates to avoid any hiccups.
- Employers should adjust their budgeting and financial planning to accommodate the increased labor costs associated with the new minimum wage rates.
- Employers should review and update any employment contracts or agreements that reference wage rates to reflect the new minimum wage, as well as the compensation structures, if applicable.
Source References
Resources
- MI Minimum Wage FAQs
- MI Wage and Hour Posting
- Michigan Supreme Court: Revives ESTA and IWOWA as Originally in the Ballots (VensureHR)
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