Michigan Minimum Wage vs Tipped Minimum Wage

Michigan Minimum Wage vs Tipped Minimum Wage: Key Takeaways

Michigan's standard minimum wage rose to $12.48 per hour on February 21, 2025, with scheduled increases up to $15.00 by January 1, 2027.
The tipped minimum wage started at 38% of the standard wage ($4.74/hr) on February 21, 2025, and will incrementally increase to 50% by January 1, 2031.
Employers must ensure tipped employees’ combined wages and tips equal or exceed the standard minimum wage, making up any shortfall.

Understanding the distinctions and scheduled changes between Michigan’s minimum wage and tipped minimum wage is essential for compliance. This guide helps clarify the current rates, legislative background, and employer responsibilities.

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1. Overview of Michigan Standard Minimum Wage

Michigan’s standard minimum wage has undergone notable increases recently. As of February 21, 2025, it stands at $12.48 per hour. The wage is set to increase to $13.73 on January 1, 2026, followed by a rise to $15.00 per hour on January 1, 2027.

Starting in 2028, Michigan will adjust its minimum wage annually based on inflation rates. These inflation-based adjustments ensure that wages keep pace with cost-of-living changes, providing ongoing wage growth aligned with economic conditions.

Scheduled Minimum Wage Increases Until 2027

February 21, 2025: $12.48 per hour
January 1, 2026: $13.73 per hour
January 1, 2027: $15.00 per hour

This progressive increase plan aims to raise wages for all workers in Michigan systematically.

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2. Michigan Tipped Minimum Wage Breakdown

Tipped employees receive a base hourly wage that is a percentage of the standard minimum wage. This base wage is supplemented by tips, which together must meet or exceed the full standard minimum wage.

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As of February 21, 2025, the tipped minimum wage in Michigan is 38% of the standard minimum wage, equating to $4.74 per hour. This percentage will increase by 2% annually, reaching 50% of the standard minimum wage by January 1, 2031.

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Tipped Minimum Wage Schedule

February 21, 2025: 38% of standard wage ($4.74/hr)
January 1, 2026: 40% of standard wage ($5.49/hr)
January 1, 2027: 42% of standard wage ($6.30/hr)
Incremental 2% increases yearly until 50% in January 2031

This gradual increase provides tipped employees with a more substantial base wage over time, while still acknowledging tips as a vital component of their earnings.

3. Legislative Background and Impact on Minimum Wage Increase

In 2018, Michigan passed robust minimum wage and sick leave laws via citizen petitions. The Legislature amended these laws, but in July 2024, the Michigan Supreme Court struck down the amendments as unconstitutional. This ruling reinstated the original laws but adjusted the schedule for wage increases.

The court’s decision accelerated the minimum wage increases and altered how the tipped minimum wage would phase in. This led to the current stepped approach where the standard wage increases faster, while the tipped wage percentage gradually climbs over several years.

Employers and employees should be aware that these legislative shifts are part of Michigan's commitment to improving worker compensation while balancing the interests of businesses relying on tipped staff.

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4. Employer Responsibilities for Michigan Tipped Wage Workers

Employers must ensure that tipped employees earn at least the standard minimum wage through a combination of base pay and tips. If total earnings fall short on any pay period, employers are legally required to make up the difference.

Accurate record-keeping of tips and wages is crucial to demonstrate compliance. Failure to comply with wage laws can lead to penalties and legal actions.

For guidance on tip handling policies, see owner tip policies.

Employers should also stay updated with scheduled wage increases to adjust payroll accordingly and provide timely communication to tipped workers about their pay structure.

5. Implications for Michigan Employees and Businesses

For tipped employees, the scheduled increase in the tipped minimum wage base means more predictable and steady income, reducing reliance solely on tips to meet basic earnings needs.

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For businesses, especially in the hospitality and service sectors, these changes may affect payroll budgets but also support fair compensation practices that can enhance employee retention and satisfaction.

Employers should evaluate their wage policies regularly and consider how the phased tipped wage increase impacts their operations and employee morale.

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6. Useful Resources for Michigan Minimum Wage and Tipped Wage Guidance

To stay informed and compliant, visit these official sources:

Michigan Minimum Wage vs Tipped Minimum Wage: Conclusion

Michigan's evolving wage laws reflect a thoughtful approach to balancing fair pay for all workers, including those in tipped positions. The scheduled increases to both standard and tipped minimum wages provide a clear path toward improved earnings.

Employers must stay vigilant in meeting wage obligations and maintaining compliance, while employees can expect steadily improving base wage protections alongside tips. With the right knowledge and preparation, Michigan’s workforce and businesses can navigate these changes successfully.

01. What are the scheduled increases for Michigan’s standard minimum wage?

Michigan’s standard minimum wage is set to increase to $12.48 per hour on February 21, 2025, $13.73 on January 1, 2026, and $15.00 on January 1, 2027, with inflation-based adjustments starting in 2028.

02. How is Michigan’s tipped minimum wage structured?

The tipped minimum wage in Michigan starts at 38% of the standard minimum wage ($4.74/hr) as of February 21, 2025, and will increase by 2% annually until it reaches 50% by January 1, 2031.

03. What are employer responsibilities regarding tipped employees’ wages?

Employers must ensure that the combination of base pay and tips for tipped employees equals or exceeds the standard minimum wage. If the total falls short, employers are required to make up the difference and keep accurate records.

04. How did Michigan’s Supreme Court ruling affect wage laws?

The 2024 ruling reinstated the original minimum wage and sick leave laws, accelerated wage increases, and altered the phased-in approach for the tipped minimum wage percentage.

05. Where can employers find official guidance on Michigan wage laws?

Employers can refer to the Michigan Department of Labor and Economic Opportunity website, official wage increase schedules, and the Michigan Legislature’s workforce opportunity wage act for accurate and updated information.