Detroit Minimum Wage Law Attorneys Help Fight Wage Theft

Minimum wage laws ensure U.S. workers receive no less than a certain amount of hourly compensation, regardless of the type of work they do. Like every other worker, minimum wage workers have the legal right to be paid for all hours worked.

Under federal law, employers must track every worker’s hours and pay them for the time they spend working. Some employers try to skirt this obligation and pay workers less than they deserve. This is called “wage theft.”

Small amounts of uncompensated time can add up to significant underpayment for minimum-wage workers. If you aren’t being paid what you are owed, talk to the experienced attorneys at Sommers Schwartz, P.C.

What Are Minimum Wage Laws?

Minimum wage laws create a “floor” for employee wages. They set a minimum amount that employers must pay for each hour of work an employee completes.

In 2009, the Fair Labor Standards Act (FLSA) set the federal minimum wage at $7.25 per hour. As of 2023, this remains the federal minimum wage. Most U.S. employers must pay workers at least $7.25 per hour, although several specific exceptions exist.

Exceptions to Minimum Wage Laws

States may pass laws setting a higher minimum wage than the federal minimum. Michigan’s Workforce Opportunity Wage Act sets state standards for minimum employee wages, including tipped employees and minor children.

As of January 1, 2025, Michigan’s minimum wage is $12.48 per hour. The Michigan minimum wage adjusts in January each year under certain factors set by state law. Most Michigan workers are entitled to the state minimum wage.

However, state and federal laws authorize a “subminimum wage” for some workers. Groups that may receive a subminimum wage in Michigan include workers under age 20 for the first 90 days of employment and disabled workers under Section 14(c) of the FLSA.

Minimum Wage Tip Credit

Employees in positions that customarily and regularly receive gratuities from guests, patrons, or customers for services may receive a lower hourly minimum wage because their employer is entitled to a “tip credit” that offsets a portion of their wages. As of January 2023, Michigan’s effective tipped minimum wage is $3.84 per hour. However, the employer must make up the difference if an employee doesn’t earn enough gratuities for their total earnings to meet or exceed Michigan’s ordinary minimum hourly wage.

The laws about tips, gratuities, and employer responsibilities are complicated and have changed over time. You should consult an attorney if you are concerned about your employer miscalculating your wages, withholding tips or gratuities, or improperly reporting your taxable wages.

Tracking Work Hours

Because the minimum wage is tied to an employee’s hours, correctly tracking and calculating work time is essential. However, tracking work hours can be confusing. Is an employee entitled to pay if waiting for a job to start? What if they are on call? Are they entitled to paid breaks or meal periods?

The U.S. Department of Labor provides guidelines for determining when an employee is doing something requiring compensation. For example:

• Voluntary tasks must be compensated if the employer allows the employee to do the task. For example, if a worker voluntarily stays behind to restock a work area, and the employer allows the worker to do so instead of sending them home, the employer must pay for the time worked.
• Waiting time is covered if an employee is “engaged to wait.” For instance, a receptionist whose job is to be present at the front desk whether customers come in or not is “engaged to wait.” Waiting at the desk to help any customer who arrives during a shift is part of this receptionist’s job.
• On-call time must be paid if the employee must wait at the employer’s workplace. If the employee is allowed to do what they want outside the workplace with the understanding that they will come in promptly if called, the on-call time may be unpaid.
• Rest periods are not required. If an employer chooses to give workers rest periods, they must be paid if the rest periods are short (usually under 20 minutes). Longer rest periods for meals can be unpaid, but workers may not be required to do anything for the employer during the unpaid break. If an employee must do any type of duty, including being on call or “engaged to wait,” the employer must count that break as time worked.

Certain rules also apply to training sessions, sleeping, and different types of travel. Determining exactly when an employee is working can be challenging. Unfortunately, some employers take advantage of this complexity to avoid paying their employees for all their work.

Wage Theft in Michigan

Wage theft occurs when employees work their hours but don’t receive the pay they earned for all the time they worked. Wage theft may range from a few missing pennies to losing entire paychecks. Wage theft violates the Michigan Workforce Opportunity Wage Act. It also violates federal law, including parts of the Fair Labor Standards Act (FLSA).

Wage theft can happen in many ways. For example:

• Employers may ask workers to change clothes or perform preparatory or cleanup work before clocking in or after clocking out.
• Employers may require workers to go through unpaid security checks or other daily administrative measures.
• Workers may be asked to perform uncompensated tasks outside the office, such as taking phone calls or answering emails.
• Employers may fail to calculate or pay overtime correctly.
• Employers may withhold wages under the guise of “disciplinary action.”
• Employers may fail to pay employees for required training or meetings.
• Employers may improperly withhold tips and gratuities earned by workers.
• Employers may misclassify employees as “exempt” or “independent contractors” to avoid paying payroll taxes, benefits, worker’s compensation, and overtime.
• Employers may fail to pay workers the difference between the tipped employee base pay plus tips and the minimum wage.
• Employers may alter timesheets or require employees to record fewer hours on their timecards than they worked.

Employers may engage in other illegal behavior, such as paying with checks that bounce or promising to make up lost wages that are never repaid. These events are also a form of wage theft because they enable the employer to keep money that rightfully belongs to their employees.

Wage theft is the most common form of theft in the United States, accounting for nearly $15 billion in underpaid wages nationwide. One study found that about 17 percent of U.S. workers earn less than minimum wage, even though they are legally entitled to it.

At Michigan’s minimum wage, one employee who works just 30 minutes a day “off the clock,” five days per week, loses over $1,300 annually. This could easily happen if a worker spends 15 minutes before each shift preparing for work or donning safety gear and 15 minutes after work cleaning and removing that gear.

Paycheck Deductions

Employers can deduct certain items from employees’ paychecks – but only under certain rules. For example, federal law allows employers to deduct amounts for:

• Cash or merchandise shortages (for instance, if a cash register does not balance).
• Required uniforms and tools.

These deductions have limits, however. An employer may not deduct so much from an employee’s paycheck that the total falls below the minimum wage per hour of work. Also, such deductions may not reduce a worker’s overtime pay. In Michigan, written consent from the employee is required before an employer can legally deduct wages.

What To Do if You Need Help

Employers in Detroit and across the U.S. get away with wage theft and minimum wage violations because workers often don’t have the resources to fight back. They may work long hours and receive little pay. When an employer commits wage theft, these workers receive even less compensation than they earned, which makes asserting their rights even harder.

Often, workers fear losing their jobs if they speak up about suspected wage theft. Michigan and Federal law prohibits employers from firing employees or taking any other adverse employment action against an employee for filing a complaint with the state’s Wage and Hour Division or consulting with an attorney. If your employer retaliates, you have additional rights and may be able to pursue further compensation.

If you suspect you’re not being paid what you are owed, contact Sommers Schwartz for a free consultation. Our attorneys will help you understand your options and discuss ways to recover your unpaid wages without paying out of pocket for the representation you need and deserve.