State of Michigan and federal laws governing the payment of employees are some of the most complicated laws we deal with. Federal wage and hour laws typically set the minimums which are often increased under state mandates. New rules promulgated by the U.S. Department of Labor governing eligibility for overtime pay will take effect on January 1, 2020. And Michigan intends to increase these new federal thresholds even further.
Currently, employees covered by the federal Fair Labor Standards Act (FLSA) must be paid time and a half for all hours worked in excess of 40 hours per week. However, salaried employees who are properly classified as administrative, executive or professional employees and are paid at least $23,660 annually ($455 per week) are exempt from the overtime pay requirement. Further, highly compensated employees, regardless of their classification, who are paid at least $100,000 per year are likewise exempt from the overtime pay rules.
Effective January 1, 2020, salaried administrative, executive or professional employees must be paid at least $35,568 annually ($684 per week) in order to be exempt from the overtime pay requirement, while highly compensated employees must be paid more than $107,432 annually to be exempt.
And, on Thursday, October 24, 2019, Michigan’s governor signed an executive order directing the Michigan Department of Labor and Economic Opportunity to promulgate new rules that will raise the overtime exemption threshold even higher than the new federal thresholds and otherwise increase overtime pay protections for Michigan workers. It is unknown how long the rule-making process will take, but it is expected to be concluded sometime in 2020.
Need help navigating all of this? Give us a call at (248) 477-6300.