Payroll and Benefits Guide United States – Michigan

Employer

Employer Payroll Contributions

Employee

Employee Payroll Contributions

Employee

Employee Income Tax

General

The state minimum wage is 10.10 USD per hour.

Payroll Cycle

In general, employees are paid semi-monthly and monthly.

Should the payment date be semi-monthly, the payment must be made as follows:

• Wages from the first half of the month must be paid by the 1st of the following month, earnings for the second half of the month must be paid to the employee by the 15th of the next month.

Should the payment date be monthly, the payment must be made as follows:

• an employee paid monthly must receive their wage no later than the 1st of the following month.

13th Salary

There is no legislation for 13^th month payments in Michigan.

General

In Michigan, the working week is a maximum of 40 hours per week, 8 hours per day.

Overtime

Michigan adheres to the Fair Labour Standards Act (FLSA), with overtime being paid when employees work more than 40 hours in a single week. The employer must pay 150% of the regular salary rate for the extra hours worked as overtime. Similarly, if employees are scheduled to work on weekends or rest days, no additional payment is required.

However, should an Employer request an employee to work in exceptional circumstances on these days, then overtime will be payable at 150% of the regular salary rate for the extra hours worked.

The Wage and Hour Division (WHD) of the Department of Labour (DOL) is responsible for the administration and enforcement of the FLSA.

Working Week

Monday-Friday

Paid Time Off

Michigan does not have any state statute governing the amount and payment of vacation time; however, it is common for employers to offer paid vacation leave.  This must comply with employment law and be stipulated in the employment contract or collective bargaining agreement.

Public Holidays

There are 16 public holidays in Michigan. Private employers are not required to provide either time off or overtime pay on these days.

Sick Days

It is common for an employer to follow the Family and Medical Leave Act (FMLA) which provides certain employees with up to 12 weeks of unpaid, job-protected leave per year for certain family and medical reasons (maternity leave, serious illnesses or if the employee needs to care for a spouse or child).

Employees are eligible for FMLA if they have worked for their employer for at least one year, completed a minimum of 1,250 hours over the past year, and worked at a location where the company employs 50 or more employees within 75 miles.

FMLA eligible employees are entitled to:

• Twelve working weeks of leave in any one year for a child’s birth and to care for the new born child within one year of birth.
• The employee may be entitled to leave for the adoption or foster care of a child and care for the newly placed child within one year of placement.
• To care for the employee’s spouse, child, or parent who has a severe health condition.
• A serious health condition that makes the employee unable to perform the essential functions of their job.
• any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty.”

OR

• Twenty-six working weeks of leave during a single one-year period to care for a covered servicemember with a serious injury or illness if the eligible employee is the service member’s spouse, son, daughter, parent, or next of kin (military caregiver leave).

It is common practice for employers in Michigan to provide their employees with 1 hour of sick leave for every 30 hours worked up to a maximum of 40 hours per year.  This leave accrual starts on the employee start date and can be used any time after completion of 90 days of employment.

In addition to the Family and Medical Leave Act (FMLA) and the Pregnancy Discrimination Act, the Michigan Civil Rights Act states the amount of time provided for leave and employment-related purposes, including receipt of benefits under the fringe benefit program.

Maternity Leave

The state of Michigan does not require employers to provide paid maternity leave. If an employee is eligible and covered by the Family and Medical leave act, they may be allowed unpaid leave from the federal government.

Paternity Leave

The state of Michigan does not require employers to provide paid paternity leave. If an employee is eligible and covered by the Family and Medical leave act, they may be allowed unpaid leave from the federal government.

Parental Leave

The state of Michigan does not require employers to provide paid parental leave. If an employee is eligible and covered by the Family and Medical leave act, they may be allowed unpaid leave from the federal government. Employees who are eligible are entitled to up to 12 work weeks of leave during a 12-month period.

Other Leave

Michigan law states that all employers must provide their full-time employees job-protected but unpaid time off from work to perform their duty as jurors or as a witness in a case, responding to a subpoena; or acting as a plaintiff or defendant in the courts. Employees must provide a copy of the jury summons to the employer as evidence of requirement.

In addition to the federal law USERRA, Michigan law provides protection against discrimination for members of U.S. armed forces, reserves, National Guard, commissioned corps of the Public Health Service, and any other category of persons designated by the president in a time of war or emergency.

It also entitles military service members to temporary unpaid leave for their period of military service, training, or induction into the military.

Termination Process

Except in mass dismissals or as provided for in an employment contract or a collective bargaining agreement, U.S. law does not impose a formal “notice period” to terminate an individual employment relationship, and employment is stipulated “at will.”

This means that either the employer or the employee may end the employment relationship without giving either notice or reason, provided it is not illegal, or discriminates against a category protected by law etc,  as per the Federal Worker Adjustment and Retraining Notification Act (WARN).

The employment contracts of executives and other highly skilled individuals often incorporate a “just cause termination” clause which mandates that the employer may only terminate the employee for “cause” and lists the permissible grounds. In such cases, the parties negotiate the foundations for a “just cause” termination case-by-case.

Notice Period

In Michigan, most employees are employed “at-will,” and either party can terminate the employment relationship without notice. In Michigan, pay out of unused vacation time is not required by law. Still, generally, employers will pay an employee for unused vacation days, provided the employee gave some advanced notice of resignation; there is no official notice period. Still, in general practice, two weeks’ notice is a minimum requirement.

In mass dismissal cases the Worker Adjustment and Retraining Notification Act (WARN Act) must be followed, and employers must give 60 days’ notice to impacted employees.

Severance Pay

Except as otherwise provided in an employment contract or collective bargaining agreement, employers do not need to make severance payments to terminated employees. Employers who choose to offer severance pay need to have the provision within the employee’s contract and agreed to by both parties, many employers choose to offer severance payment linked to the employee’s length of service.

Probation Period

No legal provision governs a formal “trial /probation period.” However, it is common practice for employers to set a performance evaluation after the first 90 days.

VISA

Foreign nationals without permanent resident status or a work visa are not permitted to work in the United States. An employer seeking to hire a foreign national may file a petition with the United States Department of Homeland Security/ United States Citizenship and Immigration Services (“USCIS”) for an employment visa on behalf of the prospective employee.

If the petition is approved, the prospective employee must obtain a “visa stamp” from a United States embassy or consulate (Canadian citizens are exempt from this requirement).  To get a temporary U.S. work visa, an employer must file a petition with U.S. Citizenship and Immigration Services (USCIS). An approved petition must be part of the visa request; the types of visas include:

• H-1B – for applicants with a college degree hired to do specialised work. The visa is valid for three years and can be extended for an additional three years. The visa is connected to the employer that filed the petition. If there is a change of employer, the new employer must repeat the process. There are 65,000 H-1B visas available each year.
• H-1B1 – for applicants with a college degree from Chile and Singapore. The US government grants up to 1,400 visas to Chilean citizens and 5,400 from Singapore each year.
• H-2A – for temporary or seasonal agriculture work. It is limited to citizens of qualified countries. Usually valid for up to 1 year and can be extended to a maximum of 3 years.
• H-2B – for temporary non-agricultural work. These visas are limited to citizens of qualified countries. Usually valid for up to 1 year and can be extended to a maximum of 3 years.
• L – for intercompany transfers (people transferred from a foreign company to a US branch of the company.) The applicant must have been employed at the company for a year before the transfer and work in a managerial level position or higher with specialised knowledge.
• 0 – for people with extraordinary ability in science, arts, education, business, or athletics.

The standard procedure is to obtain a short-term work visa and then apply for an immigrant visa after the employee has started working in the United States.

For those seeking employment-based immigrant visas:

• E-1 – Highest priority employment for those with extraordinary ability in science, arts, education, business, and athletics.
• E-2 – for those with advanced degrees or exceptional ability.
• E-3 – for skilled workers and professionals, as well as unskilled workers.
• E-4 – Members of certain immigrant groups.
• E-5 – Immigrant investors in US companies (substantial investment)

Alternatively, an employer may sponsor a potential employee’s application for permanent resident status, referred to as a “green card,” if the employee can establish that the potential employee is a multinational executive/manager transferee, has unique skills, or has been offered a job in the United States. The employer must have been unable to recruit a U.S. worker who meets the position’s minimum requirements.

All employers are obligated to verify that all individuals they employ are authorised to work in the United States.

General

Michigan has a minimum flat rate state sales tax rate of 6.00%.