Recent Publications
Exceptions Under the Fair Labor Standards Act Could Soon Be Lost
By G. Alan Wallace
The sweeping effects of the recent change to the Michigan Minimum Wage Law will soon be felt by employers across the State of Michigan. Public Act 81, signed into law by Governor Jennifer Granholm on March 28, 2006, may significantly affect some overtime pay exemptions.
Effective October 1, 2006, the new minimum wage in the State of
Michigan will be $6.95, an increase of $1.80 per hour from the current
rate of $5.15 per hour. The $6.95 minimum wage rate will remain in
effect until July 1, 2007, then increase to $7.40 per hour on July 1,
2008.
With a few exceptions, the Michigan Minimum Wage Law covers most
employers in the State. The Michigan Minimum Wage Law defines a
covered employer as “a person, firm, or corporation, including the state
and its political subdivisions, agencies, and instrumentalities, and a
person acting in the interest of the employer, who employs two or more
employees at any one time within a calendar year.”1
Historically, the Michigan Minimum Wage Law has had little significance to employers because the Michigan Minimum Wage Law is inapplicable unless the application of the minimum wage provisions of the Federal Fair Labor Standards Act would result in a lower minimum wage than that prescribed under Michigan law. However, once the new minimum wage becomes effective October 1, 2006, the Michigan minimum wage will exceed the federal minimum.
A major concern arising from the Michigan minimum wage exceeding
the federal minimum is the possible loss of exemptions from the
separate requirement that employees receive time and a half pay for
overtime work. Both Michigan law and the Federal Fair Labor Standards
Act exempt certain executive, administrative, and professional
employees from the overtime pay requirement. Yet the federal law
contains dozens of additional exemptions which the Michigan law does
not. These additional examples include certain employees of:
automobile dealerships, broadcasters, motor carriers, and others.
Because of the provision that the Michigan Act is inapplicable unless
application of the federal minimum wage would result in a lower minimum
wage than that prescribed under Michigan law (which will be the case
startingOctober 1, 2006), continued recognition of these special
federal exemptions in Michigan is in doubt.
The upcoming increase in the minimum wage, and resulting possible
loss of some important overtime exemptions, will force many employers
to change their overtime pay practices, and employer compliance is
critical. Please feel free to contact Fraser Trebilcock Davis &
Dunlap, P.C.’s Labor, Employment and Civil Rights Department regarding
any questions or issues that you might have regarding the recent
changes to the Michigan Minimum Wage Law and how the changes affect your
business.
1SeeMCL § 408.382(a) and (b)
Mr. Wallace is an associate in the Litigation Department at Fraser Trebilcock Davis & Dunlap, P.C. in the Lansing office. He may be contacted at 517-377-0822 or at awallace@fraserlawfirm.com.