Michigan Minimum Wage Update - House Passes Overtime Exemption Fix, But Obstacles Remain

Earlier this year the Michigan legislature amended the Michigan Minimum Wage Act to increase the state minimum wage in several stages, beginning on October 1, 2006. Due to some unclear language in the Act, it is arguable that when the Michigan minimum wage exceeds the federal minimum wage (which it will, as of October 1) certain federal overtime pay exemptions will become unavailable to Michigan employers. The Michigan Chamber of Commerce and other organizations have been vigorously advocating a further amendment to assure that the federal exemptions remain available.

On June 21 the House passed HB 6213, which will fix the problem if it becomes law. The bill has been referred to the Senate Committee on Commerce and Labor, which is chaired by Senator Allen (R, Traverse City). We expect that the Senate will pass HB 6213 before the summer break. Although the Governor could veto the bill, legislative observers do not expect her to do so.

However, under legislative rules the bill will not be given “immediate effect” unless 67% of both legislative houses vote to do so. The House passed the bill by a “party line” vote of 57 “for” to 49 “against,” which precluded a 67% “immediate effect” vote. We expect that the Senate vote will also be “party line” and will also not result in “immediate effect.” In that case the amendment will not become effective until 90 days after the end of the legislative session, which in this case would be around March 31, 2007. This would result in a “gap” period, during which the ambiguous provision in the Act would be in effect without the amendment.

Republican legislators are proposing to keep the bill in the legislature after enactment instead of presenting it to the Governor for signature, in the hope that this will allow additional time to persuade enough Democrats to vote for immediate effect before October 1. If that happens, the “gap” problem will be eliminated and any risk of veto will also be eliminated or at least dramatically reduced.

The Senate Committee on Commerce and Labor plans to hold a hearing to discuss HB 6213 on Monday, June 26 at 1:00 p.m. in the Farnum Building in Lansing (the time and place of this hearing is subject to change). Republican legislators are asking for as many persons in support of HB 6213 to attend the hearing as possible. They also seek testimony from both employers and employees about the negative impact if the legislature fails to fix the problem before October 1. If you wish to attend or testify please call Senator Allen’s office at 517.373.2413 for further information.

We will continue to update you on this issue. If you have questions please contact me or any member of our Labor and Employment Law Practice Group.