Detroit Minimum Wage Law Attorneys Help Fight Wage Theft

Minimum wage laws ensure that U.S. workers receive at least 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 their work hours.

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

Small amounts of uncompensated time can amount 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.

The Fair Labor Standards Act (FLSA) became law in 1938, establishing a federal minimum wage, a cap on hours worked per week, and restrictions on child labor. In 2009, the FLSA raised the federal minimum wage to $7.25 per hour. As of 2024, this remains the federal minimum wage. Most U.S. employers must pay workers at least $7.25 per hour, although some narrow exceptions exist.

Michigan Minimum Wage Laws

States may pass laws setting a higher minimum wage than the federal minimum. Michigan’s Workforce Opportunity Wage Act sets state minimum employee wages, including wages for tipped employees and minor children. Michigan adjusts its minimum wage in January of each year based on factors set by state law.

As of January 1, 2024, Michigan’s minimum wage is $10.33 per hour. Most Michigan workers are entitled to the state minimum wage, with some exceptions:

• Minors aged 16 and 17 must be paid at least $8.78 per hour.
• The minimum hourly pay for tipped employees is $3.93 per hour.
• Newly hired employees aged 16 to 19 may receive a training wage of $4.25 per hour for their first 90 calendar days of employment.

Michigan 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. 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.

Upcoming Changes to Michigan Minimum Wage and Tip Credit

Michigan voters approved an initiative on the 2018 ballot to raise Michigan’s minimum wage to $12 and eliminate the tip credit by 2024. Legislative changes to the ballot measure led to court challenges, delaying the implementation of the higher wage structure.

In July 2024, the Michigan Supreme Court issued a final ruling supporting the implementation of this initiative as Michigan voters intended. The Court directed the state treasurer to set a new wage scale accounting for inflation between 2018 and 2024.

Under the adjusted scale, Michigan’s minimum wage will rise to
$10 an hour plus an inflation adjustment, which experts estimate could be about $12.58 an hour in 2025. The minimum wage for tipped workers will also increase yearly until the tip credit is completely phased out in 2029.

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 that must be compensated. 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 an essential 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). More extended rest periods (such as meal breaks) can be unpaid, but workers may not be required to do anything for the employer during the unpaid time. 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.

Specific 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 ambiguity to avoid paying their employees for all their work.

Wage Theft in Michigan

Wage theft occurs when employees don’t receive the pay they earned for all the time they worked. It may range from a few missing pennies to losing entire paychecks. Wage theft violates the Michigan Workforce Opportunity Wage Act and federal law, including parts of the 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 perform other administrative measures off the clock.
• Workers may be expected 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 late, issuing checks that bounce, or paying in cash “under the table.” These practices 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.

With Michigan’s minimum wage, an employee who works 30 minutes a day “off the clock” for five weekly shifts 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. For example, state and 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.
• Check cashing and credit card usage fees.
• Broken or damaged equipment.

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.

Overpayment of Wages

An employer can deduct overpayments of wages or fringe benefits paid directly to an employee without written consent if:

• The deduction(s) occurs within six months of the overpayment;
• The overpayment was the result of a miscalculation, typo, or other clerical error;
• The employer gives the employee a written explanation at least one pay period before making the deduction;
• The deduction is not more than 15% of the gross wages earned for that pay period; and
• After all other required and authorized deductions, the deduction for the overpayment does not reduce the employee’s hourly gross pay rate below the minimum wage for that pay period.

All these conditions must be satisfied to comply with the law. If you believe an employer has wrongfully deducted overpayments from your wages, contact an attorney.

What To Do if You Need Help

Employers in Detroit and across the country get away with wage theft and minimum wage violations because workers rarely have the resources to fight back. They may work long hours for little pay. When an employer commits wage theft, these workers receive even less compensation, 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 prohibit 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, P.C. 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.