A standard workweek in Michigan is 40 hours. If an employee works more than the normal 40-hour week, the additional hours are considered overtime. Under the Workforce Opportunity Wage Act, an employer must pay all non-exempt employees overtime pay when their workweek exceeds 40 hours. Under Michigan law, overtime pay must be at least one and a half times an employee’s regular hourly wage. (If you are part of a union, the minimum wage and overtime requirements are governed by a Collective Bargaining Agreement.)

The Fair Labor Standards Act (FLSA) determines whether a position is entitled to overtime pay or is “exempt” and not eligible for overtime pay. An employee may be considered exempt if they meet all three of these criteria:

1. The employee must earn a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed.
2. The amount of salary paid must meet a minimum specified amount. As of 2020, the minimum salary for exemption is $35,568, or $684 per week. (Previously, the minimum salary was $23,660, or $455 per week.)
3. The employee’s duties must primarily involve executive, administrative, or professional duties as defined by the regulations (the “duties test”).

If any one of the three tests is not met, a position must be classified as non-exempt (entitled to overtime). Unfortunately, these three criteria aren’t as straightforward as they seem.

Some employees, including business owners, doctors, lawyers, teachers, and outside sales employees, are exempt even if they don’t meet the salary minimum. Employees in specific fields, including academic administrative personnel and computer employees, are subject to different earnings requirements. Determining whether an employee meets the “duties test” can require a detailed investigation into their actual job duties (rather than relying on the job description).

Individuals who are independent contractors rather than employees are not entitled to overtime pay. However, many employers misclassify their workers to reduce their liability for health and safety, justify denying benefits, escape paying state and federal taxes, and avoid paying overtime.

Michigan uses the 20-factor test adopted by the IRS to determine if a worker is accurately classified as an independent contractor. This test evaluates how much behavioral and financial control an employer exerts over the worker and other aspects of their relationship. Contact a Michigan employment attorney if you believe you have been misclassified as an independent contractor and may be owed overtime.