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Find out how Remote can guide you through the complexities of managing cross-border hiring, payroll, taxes, and compliance.

Payroll management in Michigan

Michigan has a diverse economy driven by industries such as automotive manufacturing, technology, healthcare, and agriculture. Employers in Michigan must navigate various payroll regulations, including minimum wage laws, state income tax, and unemployment insurance requirements. Understanding these regulations ensures compliance and smooth payroll operations.

Payroll breakdown in Michigan

Employers in Michigan must adhere to both federal and state payroll regulations regarding wages, taxes, and benefits. Below is an overview of key payroll components:

Minimum wage and overtime

  • Minimum wage: Michigan’s minimum wage is $10.33 per hour, which is higher than the federal minimum wage.
  • Overtime rules:
    • Michigan follows federal overtime laws, requiring employers to pay 1.5 times an employee’s regular rate for hours worked beyond 40 hours in a workweek.
    • Certain exemptions apply based on job classification.

State income tax

  • Michigan has a flat state income tax rate of 4.25% for all employees.
  • Employers must withhold state income tax and remit it to the Michigan Department of Treasury.

Unemployment insurance (UI) tax

  • Employers must contribute to Michigan’s Unemployment Insurance (UI) program, managed by the Michigan Unemployment Insurance Agency (UIA).
  • The wage base for UI tax in Michigan is $9,500.
  • UI tax rates vary based on an employer’s experience rating and range from 0.06% to 10.3%.

Workers’ compensation

  • Michigan law requires most employers to carry workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.

Payroll tax filing and payment deadlines

  • Employers must register for a Michigan Withholding Tax Account Number with the Michigan Department of Treasury.
  • State withholding tax returns must be filed monthly, quarterly, or annually, depending on employer classification.
  • UI tax reports must be submitted quarterly to the Michigan Unemployment Insurance Agency.
  • Payroll tax payments can be made electronically through the Michigan Treasury Online (MTO) portal.

Quick facts: Important considerations for employers

  • State minimum wage compliance: Michigan’s minimum wage is higher than the federal rate, and employers must comply with state laws.
  • Final paycheck rules:
    • If an employee is terminated, employers must provide the final paycheck by the next scheduled payday.
    • If an employee resigns, the final paycheck must be provided by the next scheduled payday.
  • New hire reporting: Employers must report new hires to the Michigan New Hire Reporting Center within 20 days.
  • Paid sick leave: Michigan requires employers with 50 or more employees to provide paid sick leave at a rate of one hour per 35 hours worked, up to 40 hours per year.
  • Payroll recordkeeping: Employers must maintain payroll records for at least three years to comply with state and federal laws.
  • Right-to-work state: Michigan is not a right-to-work state as of 2023, meaning employees may be required to join a union if applicable.

Run payroll in Michigan with Remote

Managing payroll in Michigan requires careful attention to state-specific regulations, including minimum wage compliance, UI tax requirements, and workers’ compensation laws. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

To see just how easy global payroll can be, book a demo today.