The Michigan Supreme Court recently reinstated voter-initiated versions of the state’s minimum wage and paid sick leave laws, resulting in significant changes to the minimum wage rates. On October 1, 2024, the Michigan Department of Labor and Economic Opportunity issued a press release detailing these changes, which will take effect in 2025. Notably, Michigan’s minimum wage will increase twice in 2025 – first on January 1, 2025, and again on February 21, 2025.

Minimum Wage Increases in 2025

From January 1, 2025, to February 20, 2025:

•  Standard Minimum Wage: The hourly wage will rise from $10.33 to $10.56.
• Minors (85% Rate): Employees under 18 will see their wage increase from $8.78 to $8.98 per hour.
• Tipped Employees: The hourly pay rate for tipped employees will go up from $3.93 to $4.01.
• Training Wage: The training wage for newly hired employees under 20 years old for their first 90 days of employment will remain at $4.25 per hour.

Effective February 21, 2025, and Beyond:

• Standard Minimum Wage: The hourly wage will increase to $12.48.
• Tipped Employees: The hourly pay rate for tipped employees will be $5.99.
• Minors (85% Rate): The wage for minors will be $6.49 per hour.
• Minimum Reported Average Hourly Tips: Tipped employees must report an average of $10.61 per hour in tips.

Future Minimum Wage Increases

The minimum wage will continue to rise annually on February 21, according to the following schedule:

February 21, 2026:

• Standard Minimum Wage: $13.29
• Tipped Employees: $7.97
• Minors (85% Rate): $5.32
• Minimum Reported Average Hourly Tips: $11.30

February 21, 2027:

• Standard Minimum Wage: $14.16
• Tipped Employees: $9.91
• Minors (85% Rate): $4.25
• Minimum Reported Average Hourly Tips: $12.04

February 21, 2028:

• Standard Minimum Wage: $14.97
• Tipped Employees: $11.98
• Minors (85% Rate): $2.99
• Minimum Reported Average Hourly Tips: $12.72

Annual Adjustments Starting in 2028

Starting in October 2028, the state treasurer will calculate an adjusted minimum wage rate based on inflation. This adjusted rate will be published by November 1 of the year it is calculated and will take effect on February 21 of the following year.

Tipped Employees

The minimum hourly wage rate for tipped employees will undergo significant changes:

• Effective February 21, 2025: 48% of the standard minimum wage.
• Effective February 21, 2026: 60% of the standard minimum wage.
• Effective February 21, 2027: 70% of the standard minimum wage.
• Effective February 21, 2028: 80% of the standard minimum wage.
• Effective February 21, 2029: 90% of the standard minimum wage.

Key Takeaways for Employers

Employers should prepare for the upcoming wage increases by adjusting their payroll systems accordingly. In doing so, they need to be aware of the different wage rates for standard employees, minors, tipped employees, and those under the training wage. Additionally, employers should monitor the annual adjustments starting in 2028 to ensure compliance with the new rates.

Questions?

Contact the author Erica Jilek.