When you run a business in Michigan, it can be hard to stay on top of federal, state, and local payroll requirements. Every business owner knows payroll requirements go beyond just needing to pay your employees in full and on time.
At Gusto, we’ve put together a guide to everything you need to know about Michigan’s key payroll regulations and tax rules. We will also show you how Gusto can help you handle compliance guidelines, so you know you’re playing by the rules.
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Key Michigan regulations payroll professionals need to know
Michigan minimum wage
Minimum wage for adult employees in Michigan will increase between 2020 and 2021. Here’s what to expect:
- As of January 1, 2020: $9.65/hour
- As of January 1, 2021: $9.87/hour
For adult employees who earn tips, the minimum wage is:
- As of January 1, 2020: $3.67/hour
- As of January 1, 2021: $3.75/hour
The minimum wage 16- and 17-year-olds is 85% of the set minimum wage. Additionally, employees aged 16 to 19 can be paid a training wage of $4.25 an hour for the first 90 days of employment.
Michigan pay stubs
With every paycheck, Michigan employers must provide pay stubs with the following information:
- The number of hours worked
- Gross wages earned
- The dates of the pay period
- Any itemized deductions taken from the employee’s paycheck
Michigan pay periods
Michigan employers may pay their employees on any of the following schedules:
- Once per month, with payment issued within 15 days of the pay period’s ending
- Twice per month, with payment issued within 14 days of the pay period’s ending
- Weekly, with payment issued within 14 days of the pay period’s ending
You may pay employees more often, with no rules on when to schedule the payday.
Determining time worked in Michigan
Michigan has no guidelines regarding the definition of time worked. However, you must pay overtime when an employee hits 40 hours in a workweek.
Michigan overtime pay and tracking
Michigan employers must pay nonexempt employees overtime pay of time and a half for all hours worked over 40 hours during a given workweek. There are no guidelines for tracking hours.
Michigan final wage payment
When a Michigan employee parts ways with your company for any reason, you must pay all wages due by the next payday. For any contracted employees, payment is due upon termination of the contract.
Income tax withholding in Michigan
As of 2020, all Michigan employers must withhold Michigan state income tax of 4.25%.
Michigan benefits
Employees in Michigan are entitled to federal benefits outlined in the Family and Medical Leave Act (FMLA) and by Social Security. Michigan has additional state rules on these employee benefits:
- Workers’ compensation: With extremely limited exceptions, Michigan employers must provide their employees with workers’ compensation insurance.
- Health insurance: Although Michigan state law does not require employers to provide health insurance, the federal Patient Protection and Affordable Care Act (ACA) mandates that all U.S. employers with 50 or more full-time (or equivalent) employees offer employee insurance benefits.
- Sick leave: Michigan employers with 50 or more employees, whether part-time or full-time, must give employees one hour of paid medical leave for every 35 hours worked, with a maximum of 40 sick leave hours per year.
Voting: Michigan doesn’t require employers to give employees paid or unpaid time off to vote.
Why is Gusto a great payroll provider in Michigan?
1. Unlimited payroll
Some payroll platforms limit how many times you can run payroll, but not Gusto. Our flexible payroll management platform has no payroll caps, so you can meet your team’s needs easily and seamlessly. Run payroll for your team in just a few simple clicks. Your whole team can be paid in the same system, including contractors, hourly and salaried workers, employees paid at different rates, and out-of-state team members. You can even set individual pay schedules as needed.
2. Tax filings and payments
Through Gusto’s online dashboard, you can fulfill your tax-filing and payment obligations, and send your employees their W-2s and 1099s in just a few quick clicks. We can also onboard your new hires on your behalf and report your hires to the government for you. Whether you pay taxes annually or quarterly, you can use Gusto to compile, file, and pay your tax obligations quickly and on time.
Gusto is intuitive and easy to use. Not to mention, it is beautifully designed and has a persona that brings a smile to face with every notification.
Bree Mullen, Founder of Studio Us
3. Forms and reports
In Gusto, W-2s and 1099s sent to employees, auto generated year-end tax forms, customized payroll reports, and quarterly tax forms, are all paperless. Our e-file, e-sign, and e-fax tools allow you to take care of your taxes without printing and scanning any forms.
4. Employee benefits
Gusto can also help you beyond payroll. You can tend to your team’s needs with benefits administered from within the Gusto platform. With thousands of plan options across multiple categories, there’s a fit for each of your employees through Gusto’s benefits program. Our employee benefit options include:
- 401(k) programs
- Medical, dental, and vision insurance
- Life and disability insurance
- Flexible spending accounts
- Commuter programs
- Gusto Cashout™
- And more
Frequently asked questions about payroll in Michigan
What does an Michigan payroll provider need to track?
A Michigan payroll provider must track an employee’s number of hours worked, gross wages, pay periods, schedule, and deductions. Overtime hours and pay must also be tracked.
How often do employees in Michigan get paid?
Michigan employees are paid monthly, every two weeks, weekly, or more frequently. Pay must be issued within 15 days of a monthly pay period closing or 14 days within a biweekly or weekly pay period closing.
What types of payroll taxes are paid in Michigan?
Michigan payroll taxes include income tax and state unemployment insurance taxes.
Do employees in Michigan pay state taxes?
Yes. Michigan employees pay a flat 4.25% toward state income taxes. Some cities charge additional taxes between 1% and 2.4%.
