Like so many start-ups, Michigan fashion designers have, or will, experience that moment when they really, really need a hand but hyperventilate at the thought of paying an employee. You thought an unpaid intern was the answer, until you read Internships – A Teachable Moment. How do you respond when that eager student that still needs a summer internship sends you another email and tempts you with an offer to work without pay? A training wage may be the answer.
The Workforce Opportunity Wage Act, enacted last year, increased Michigan’s minimum hourly wage and permits payment of a lower “training” wage. At MCL 408.414b, Michigan permits payment of a “new employee who is less than 20 years of age a training hourly wage of $4.25 for the first 90 days of that employee’s employment.” However, you can’t displace an existing employee to hire an individual at the lower, training wage. The Act defines “displace” to include termination or any reduction of hours, wages or benefits, and the Act imposes a civil fine on anyone who violates its displacement prohibition.
Assuming you properly hire and pay an employee the training wage, what happens if you want to continue to employ your trainee after 90 days? MCL 408.414b(2) provides that for any employee who is not properly paid the training wage, “the minimum hourly wage for an employee who is less than 18 years of age is 85 percent of the general minimum hourly wage.” In other words, if your trainee is under 18 at the end of the 90 days, their wage increases from $4.25 per hour to 85 percent of the current minimum wage. If the employee is over 18 and outside the 90 day window, you need to increase their pay to minimum wage, which is currently $8.15 per hour and increases to $8.50 on Jan. 1, 2016.