In Michigan, unpaid wages are more than just an employee's hourly or salaried income. Unpaid wages also include overtime, fringe benefits, and failure to pay employees the minimum wage. Each year, Michigan's Wage and Hour Division receives over 5,000 claims and collects more than $2 million in wages and fringe benefits owed to Michigan workers.
Unpaid Wage Laws in Michigan
The Payment of Wages and Fringe Benefits Act covers most Michigan employers and employees and addresses unpaid wages, improper wage deductions, and issues with fringe benefits. The Workforce Opportunity Wage Act governs non-payment of minimum wage and overtime rates. Independent contractors generally are not protected by these laws; however, there is always a possibility that the independent contractor is wrongfully classified and should be deemed an employee. It is imperative you are mindful of your duties and that your employment status is properly classified to ensure you receive the proper wages and benefits. Employees, whether unionized or not, can file grievances under these laws if they believe they have been refused payment by an employer in Michigan.
Employers must pay the following if they are in violation of wage laws:
- Wages due to employee
- Fringe benefits outlined in an employee's contract or company policy
- Penalty at the rate of 10% annually on the wages and fringe benefits due, beginning at the time the employer is notified of a complaint being filed
Notably, damages cannot exceed two times the amount in wages and fringe benefits owed to the employee. However, employers may also be responsible for attorney costs, hearing costs, and transcript costs. Finally, the Division may assess a civil penalty of up to $1,000 against an employer who is in violation. This will be credited to the general fund of Michigan.
Statute of Limitations For Filing an Unpaid Wage Claim
Depending on the type of unpaid wage claim the employee has, Michigan has different statutes of limitations. Typically, if an employee is denied paid medical leave, that employee has six months to file a complaint. For non-payment of wages or fringe benefits, an employee must file a claim within twelve months. If an employee has not been paid at least minimum wage or has not been paid overtime, the statute of limitations to file a complaint is three years from the date of the violation.
What Steps Should You Take to Recover Unpaid Wages
Employees have a few options when it comes to addressing the issue of unpaid wages in Michigan. An employee may file a complaint with Michigan's Wage and Hour Program or the U.S. Department of Labor's Wage and Hour Division. Alternatively, an employee may file a lawsuit in state or federal court. Please note that if an employee files a lawsuit first, the employee cannot file an agency complaint afterwards. However, if the employee files a complaint first with Michigan's Wage and Hour Program or the U.S. Department of Labor's Wage and Hour Division, the employee has the option to file a lawsuit later.
The U.S. Department of Labor provides a step-by-step process for employees to follow when filing a complaint of unpaid wages in Michigan:
- Contact the nearest office of the Wage and Hour Division: There are two offices in Michigan, located in Detroit and Grand Rapids, where you may begin the complaint process. Here, the employee must provide their contact information, job title, work description, details of how much they were paid and when, and their employer's contact information.
- Provide helpful documents: The following documents will help the Division better investigate the claim:
- Pay stubs
- Time sheets
- Written wage agreements/employment contracts
- Fringe benefit policies
- W-2 forms
- Wait for the investigation: Once a complaint is filed, an investigator will be assigned to the complaint and will take a confidential statement from the employee. The investigator will then contact the employer, gather records, and interview witnesses. If the investigator finds the employer owes wages, the investigator will ask the employer to pay those unpaid wages. The investigator will first try to do this without a lawsuit; but, if necessary, the U.S. Wage and Hour Division can choose to file a lawsuit to recover unpaid wages.
Michigan's Wage and Hour Program provides a similar process through its state laws and offers a complaint form. There are no costs or fees when filing a complaint with either Michigan's Wage and Hour Program or the U.S. Department of Labor's Wage and Hour Division.
What Else Should Employees Know?
Michigan law protects employees from employer retaliation when employees assert their rights to recover unpaid wages. If an employee takes steps to recover unpaid wages, the employer may not retaliate or take any adverse action against that employee or any other who seeks to enforce their rights. If the employee subsequently faces adverse action, they may file an additional complaint for discrimination or retaliation within 30 days of the action.
Conclusion
There are several options for recourse if Michigan employees are denied their rightful wages. If you find yourself in a position where a Michigan employer is withholding compensation from you, reach out to a member of our team to understand your rights and explore potential courses of action.
Contributions to this blog by Kara Manuud.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.