Calculating overtime pay accurately is essential for compliance with federal and state labor laws and to maintain fair compensation practices. In Michigan, calculating overtime can vary depending on the type of employee – whether hourly, salaried, tipped, piece rate, or commission-based. Each type has its nuances, making it crucial for employers to understand how to apply the appropriate calculations to ensure compliance and avoid potential legal issues.

This guide will walk employers through the steps for calculating overtime pay for different types of employees in Michigan.

**This Article Covers**

**Understanding Overtime in Michigan**

- Which Overtime Laws Apply in Michigan?
- How Much is Overtime Pay in Michigan?
- Who is Eligible for Overtime Pay in Michigan?
- Who is Exempt from Overtime Pay in Michigan?
- What is the Regular Rate of Pay in Michigan?

**Overtime for Hourly, Salaried, and Tipped Employees in Michigan**

- How do you Calculate Overtime for Hourly Employees in Michigan?
- How is Overtime Calculated for Salaried Employees in Michigan?
- How do you Calculate Overtime for Tipped Employees in Michigan?

**Overtime for Complex Pay Structures in Michigan**

- How do you Calculate Overtime for Piece Rate Employees in Michigan?
- How do you Calculate Overtime for Commission Employees in Michigan?

**Additional Considerations for Michigan Overtime**

- What is the Statute of Limitations for Claiming Unpaid Overtime in Michigan?
- What are the Recordkeeping Requirements for Overtime Wage Compliance in Michigan?

**Understanding Overtime in Michigan**

**Which Overtime Laws Apply in Michigan?**

In Michigan, both federal and state laws govern overtime pay, and employers must adhere to the provisions that are most beneficial to the employee when the two overlap. The federal Fair Labor Standards Act (FLSA) establishes the national standard for overtime compensation.

Under the FLSA:

- Non-exempt employees are entitled to receive overtime pay at a rate of one and one-half times their regular pay rate for any hours worked over 40 in a single workweek.
- A workweek is defined as a period of 168 hours, or seven consecutive 24-hour periods, which can start on any day of the week and does not need to align with the calendar week. This flexibility allows employers to set varying work weeks as needed.
- No maximum number of hours an employee can be required to work within a workweek.
- Overtime pay is only required for hours exceeding 40, regardless of whether these hours fall on weekends, nights, or holidays.

In addition to federal regulations, the Michigan Workforce Opportunity Act applies to businesses with at least two employees. This state law generally aligns with the FLSA’s overtime requirements, ensuring that eligible employees receive overtime pay at 1.5 times their regular rate for hours worked over 40 in a workweek. However, the state law offers additional protection to employees:

**Fire protection, law enforcement, and healthcare workers are exceptions to the general rules of overtime compensation:**Employees in fire protection and law enforcement must receive overtime pay for hours worked over 216 within 28 days. Healthcare workers must be compensated at 1.5 times their regular rate for hours worked over eight per day or 80 in the 14 days.**Employers can offer compensatory time off:**Michigan employers can offer compensatory time off in lieu of overtime pay, provided there is a written agreement or company policy.

**How Much is Overtime Pay in Michigan?**

Overtime pay in Michigan is calculated as one and one-half (1.5) times the employee’s regular hourly wage for any hours worked beyond 40 in a workweek. This means if an employee’s regular pay rate is $20 per hour, their overtime rate would be $30 per hour for each hour worked beyond 40 hours in that week.

If you want to learn more, check out our guide on Michigan Overtime Laws.

**Who is Eligible for Overtime Pay in Michigan?**

Employees who are classified as non-exempt under the FLSA are eligible for overtime pay. Non-exempt status applies to employees who do not fall into specific exempt categories and who earn less than the threshold set by federal and state laws.

Check out our guide on Overtime Rights in Michigan.

**Who is Exempt from Overtime Pay in Michigan?**

Certain salaried employees in Michigan are exempt from overtime pay based on specific criteria established by the FLSA. These exemptions primarily cover those employees in executive, administrative, or professional positions. To qualify for this exemption, these employees must earn $844 weekly or $43,888 annually.

Other professionals who are exempt from overtime in Michigan are:

- Agricultural workers
- Public elective office holders and their political appointees.
- Employees at amusement or recreational establishments operating less than 7 months a year.

**What is the Regular Rate of Pay in Michigan?**

The regular rate of pay in Michigan is the basic hourly wage that an employee earns before any overtime, bonuses, or other forms of compensation are added. It is used as the basis for calculating overtime pay and ensuring compliance with wage and hour laws.

**For hourly employees:**The regular rate of pay for hourly employees is simply the hourly wage agreed upon in their employment agreement.**For salaried employees:**The regular hourly rate is calculated by dividing the employee’s weekly salary by the number of hours they are expected to work in a standard workweek.**For piece rate workers:**For employees paid on a piece rate basis, the regular rate of pay is calculated by the total earnings for the workweek by the total hours worked.**For commissioned employees:**For employees who earn commissions, the regular rate of pay includes commissions earned and is calculated based on the total earnings divided by the total hours worked.

**Overtime for Hourly, Salaried, and Tipped Employees in Michigan**

**How do you Calculate Overtime for Hourly Employees in Michigan?**

To calculate overtime for hourly employees in Michigan, employers need to determine the overtime rate based on the employee’s regular hourly rate. When calculating employers must:

**Determine the regular hourly rate:**Identify the employee’s standard hourly wage. For example, if an employee earns $20 per hour, this is their regular hourly rate.**Calculate overtime rate:**The overtime rate is one and a half (1.5) times the regular hourly rate. Using the example above, if the employee’s regular hourly rate is $20, the overtime rate would be $30 per hour ($20 x 1.5).**Identify overtime hours worked:**Overtime is calculated for hours worked beyond 40 in a workweek. For example, if an employee worked 45 hours in a week, they worked 5 hours of overtime.**Calculate overtime pay**: Multiply the number of overtime hours worked by the overtime rate. Continuing the example, if the employee worked 5 hours of overtime and the overtime rate is $30 per hour, the overtime pay would be $150 (5 hours x $30).

To learn more, you can read our guide on Your Rights as an Hourly Employee in Michigan.

**How is Overtime Calculated for Salaried Employees in Michigan?**

Calculating overtime for salaried employees in Michigan follows similar principles as for hourly employees but with some additional considerations. Salaried employees must be classified as non-exempt to be eligible for overtime pay.

If the salaried employee is non-exempt, their overtime pay is calculated as follows:

**Determine the employee’s weekly salary:**Identify the employee’s weekly salary. For example, if an employee earns $1,000 per week, this is their salary amount.**Calculate the regular hourly rate:**To determine the regular hourly rate, divide the weekly salary by the number of hours in the standard workweek of 40 hours. For instance, if the weekly salary is $1,000 and the standard workweek is 40 hours, the regular hourly rate would be $25 per hour ($1,000 / 40).**Calculate overtime rate:**The overtime rate is 1.5 times the hourly rate. Multiply the regular hourly rate by 1.5 to get the overtime rate. Using the example above, if the regular hourly rate is $25, the overtime rate would be $37.50 per hour ($25 x 1.5).**Identify overtime hours worked:**Determine the number of overtime hours worked beyond 40 in a workweek. For instance, if the employee worked 50 hours in a week, they worked 10 hours of overtime.**Calculate overtime pay:**Multiply the number of overtime hours worked by the overtime rate. For the example above, if the employee worked 10 hours of overtime at an overtime rate of $37.50 per hour, the overtime pay would be $375.

For more details, check out our guide on Your Rights as a Salaried Employee in Michigan.

**How do you Calculate Overtime for Tipped Employees in Michigan?**

Calculating overtime pay for tipped employees in Michigan involves understanding both the base wage and the tips they receive. Here’s how to calculate overtime pay for tipped employees:

**Determine the regular hourly rate**: Identify the employee’s base hourly wage. In Michigan, the base wage for tipped employees is lower than the standard minimum wage but must be at least the minimum tipped wage set by the state or federal law. As of 2024, the minimum tipped wage in Michigan is $3.93 per hour, provided the employee’s total earnings (wage plus tips) equal or exceed the minimum wage.**Calculate the regular hourly rate for overtime:**Combine the base wage with tips to ensure it meets or exceeds the state’s minimum wage. Calculate the regular hourly rate for overtime based on the combined hourly wage and tips.**Determine the overtime rate:**The overtime rate is 1.5 times the regular hourly rate. Multiply the regular hourly rate by 1.5 to get the overtime rate.**Identify the overtime hours worked:**Determine the number of hours worked beyond 40 in a workweek. For example, if a tipped employee worked 50 hours in a week, they worked 10 hours of overtime.**Calculate overtime pay:**Multiply the number of overtime hours worked by the overtime rate. For example, if the regular hourly rate of the tipped employee is $12 (base wage plus tips), the overtime rate would be $18 per hour ($12 x 1.5). If the employee worked 10 hours of overtime, the overtime pay would be $180 (10 hours x $18).

**Overtime for Complex Pay Structures in Michigan**

**How do you Calculate Overtime for Piece Rate Employees in Michigan?**

Calculating overtime pay for piece rate employees in Michigan involves a few additional steps compared to hourly or salaried employees. Piece rate employees are paid based on the amount of work they produce rather than the number of hours they work. Here’s how to calculate overtime pay for piece rate employees:

**Determine the piece rate pay:**Identify the piece rate of the amount paid per unit of work produced (e.g., per item produced, per task completed).**Calculate the total weekly piece rate earnings**: Multiply the number of units produced in a week by the piece rate to determine the total earnings from piece rate work. For example, if an employee produces 200 units in a week at a piece rate of $5 per unit, their total earnings from piece rate work would be $1,000 (200 units x $5).**Determine the regular hourly rate:**To calculate the regular hourly rate, divide the total weekly piece rate earnings by the total number of hours worked in the week. For example, if the employee worked 50 hours and earned $1,000 from piece rate work, the regular hourly rate would be $20 per hour ($1,000 / 50).**Calculate the overtime rate:**The overtime rate is 1.5 times the regular hourly rate. Using the example above, if the regular hourly rate is $20, the overtime rate would be $30 ($20 x 1.5).**Identify the overtime hours worked:**Determine the number of hours worked beyond 40 in a workweek. For instance, if the employee worked 50 hours, they worked 10 hours of overtime.**Calculate overtime pay:**Multiple the number of overtime hours worked by the overtime rate. For the example above, with 10 overtime hours and an overtime rate of $30 per hour, the overtime pay would be $300 (10 hours x $30).

**How do you Calculate Overtime for Commission Employees in Michigan?**

Calculating overtime for commission-based employees in Michigan involves several steps, unlike the hourly and salaried employees. Here’s how to calculate overtime pay for commission employees:

**Determine the total weekly earnings:**Add up all commission earnings for the week. This includes all commissions earned from sales or other performance-based compensation.**Calculate the regular hourly rate:**To find the regular hourly rate for a commission employee, you need to determine their total earnings for the week and divide that amount by the total number of hours worked.

Total weekly earnings (including commissions) / Total hours worked in the week

**Determine the overtime rate:**Multiply the regular hourly rate by 1.5 to get the overtime rate.**Identify overtime hours worked:**Determine the number of hours worked beyond the 40-hour threshold in a workweek.**Calculate overtime pay:**Multiply the number of overtime hours worked by the overtime rate.

**Additional Considerations for Michigan Overtime**

**What is the Statute of Limitations for Claiming Unpaid Overtime in Michigan?**

In Michigan, the statute of limitations for claiming unpaid overtime depends on whether the claim is made under federal or state law.

- Under federal law, the statute for filing a claim for unpaid overtime is generally
**two years**from the date the claims arose. However, if the violation is found to be willful, the statute of limitations can be extended to**three years**. - Under state law, wage-related issues including unpaid overtime must be filed within
**12 months**of the alleged violation.

Employers are advised to maintain accurate records of hours worked and wages paid to challenge employees’ claims of unpaid overtime.

### What are the Recordkeeping Requirements for Overtime Wage Compliance in Michigan?

Recordkeeping requirements for overtime wage compliance are designed to ensure that employers in Michigan maintain accurate and complete records of employees’ work hours and wages. Employers must maintain detailed records for each non-exempt employee, including employee information (name, address, date of birth, sex, and occupation), work hours, and wage information.

Employers are required to preserve payroll records, collective bargaining agreements, and sales and purchase records for at least **three years**. Records on which wage computations are based, such as time cards, piecework tickets, wage rate tables, work and time schedules, and records of additions to or deductions from wages, should be retained for at least **two years**.

In addition, employers are encouraged to employ a time and attendance tracking system that ensures accurate and comprehensive records.

**Important Cautionary Note**

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.