Guides

Michigan restaurant pay rules (2026): what to pay tipped and non-tipped staff

Mays TeamOctober 14, 2026
The Variance report in Mays for the week of September 14, 2026: scheduled and worked hours and wages for a server paid the $5.49 tipped wage and a line cook paid $13.73

Michigan sets its tipped wage as a percentage of the minimum wage, and the percentage rises every January: 40% in 2026, which makes it $5.49 an hour against a $13.73 minimum wage (Michigan LEO, 2026 minimum wage). That schedule settled a fight over the tip credit. In July 2024 the Michigan Supreme Court restored the original 2018 wage law, which would have ended the tipped wage by February 2030 (House Fiscal Agency, SB 8 analysis). In February 2025 the Legislature replaced it with today's rules, which keep a tipped wage and raise it to 50% of the minimum wage by 2031 (MCL 408.934d).

This page puts Michigan's figures in one place. It covers what you owe tipped staff like servers and bartenders, what you owe everyone else, and two example weeks with the math shown. Every figure links to the official page it comes from.

This is general information, not legal advice. Whether a rule applies can depend on your business's size and your own facts; the note at the end says more.

Michigan pay rules at a glance

As of October 14, 2026:

Rule

Michigan

Minimum wage

$13.73 an hour, since January 1, 2026

Tipped employees: minimum cash wage

$5.49 an hour, if you take the tip credit

Maximum tip credit

$8.24 an hour

Who counts as tipped

Customarily and regularly receives more than $30 a month in tips

Overtime

1.5× the regular rate after 40 hours in a workweek; no daily overtime

Meal and rest breaks for adults

Not required by Michigan or federal law

Next change

$15.00 minimum wage and $6.30 tipped cash wage from January 1, 2027

Sources: Michigan LEO, 2026 minimum wage; US DOL, tipped wages by state; MCL 408.934a; US DOL, state meal periods; US DOL, state rest periods; Michigan LEO, minimum wage; MCL 408.934d.

Other Michigan rates:

  • minors age 16-17 (85%): $11.67 an hour
  • training wage, employees under 20, first 90 calendar days: $4.25 an hour

Who counts as a tipped employee in Michigan

Michigan has no threshold of its own, so the federal one applies: a tipped employee is someone who customarily and regularly receives more than $30 a month in tips (US DOL, tipped wages by state).

In a restaurant that usually means servers, bartenders, bussers and counter staff who serve customers, including baristas who get tips. Cooks and dishwashers usually aren't tipped employees. Only tips the employee actually receives count. If someone works two jobs, say a server who also works prep shifts, the tip credit applies only to the hours in the tipped job (DOL Fact Sheet #15).

What you must pay tipped staff in Michigan

Servers, bartenders, bussers and baristas who get tips can be paid a lower cash wage, with part of their tips counted toward the minimum wage. That's the tip credit, and it comes with conditions:

  • Pay at least $5.49 an hour in cash wages. That's the $13.73 minimum wage minus the most you can credit from tips, $8.24 (Michigan LEO, 2026 minimum wage).
  • Cash wages plus tips must reach $13.73 for every hour worked, week by week. If tips fall short in a workweek, you pay the difference by the regular payday for that week (DOL Fact Sheet #15).
  • Tell them first. Before you take the tip credit, tell each tipped employee, in writing or out loud: the cash wage you pay, the tip credit you claim, that the credit can't be more than the tips they actually get, that they keep all their tips except through a valid tip pool, and that the credit doesn't apply unless you've told them all this (DOL Fact Sheet #15).
  • Overtime is figured on the full minimum wage. An overtime hour is worth 1.5 × $13.73 = $20.595. After the $8.24 tip credit, you pay at least $12.355 of it in cash wages (DOL Fact Sheet #15).
  • From January 1, 2027, the minimum wage is $15.00 (Michigan LEO, minimum wage) and the tipped cash wage $6.30: 42% of the new minimum wage (MCL 408.934d).

You don't have to take the tip credit. If you pay tipped staff the full $13.73 an hour, their tips are all on top, there's nothing to make up at the end of the week. Michigan's law describes only voluntary tip sharing, though (see below).

Michigan's own conditions

  • Written notice and written consent at hire. Tell the employee about the tipped-wage rules in writing, at or before hiring, and get their written consent (MCL 408.934d).
  • Only reported tips count. The tips that count are the ones the employee reports to you for federal payroll taxes (MCL 408.934d).
  • A signed tip statement each pay period. For every pay period you take the credit, keep a written statement of the employee's tips, signed by them and dated before they get the paycheck (Mich. Admin. Code R 408.702).

The tipped wage schedule

The tipped wage is a share of the minimum wage that rises two points every January until 2031 (MCL 408.934d):

From

Tipped wage, as a share of the minimum wage

January 1, 2026

40%

January 1, 2027

42%

January 1, 2028

44%

January 1, 2029

46%

January 1, 2030

48%

January 1, 2031

50%

From 2028, the minimum wage itself rises each January by inflation, unless Michigan's unemployment rate was 8.5% or more the year before (MCL 408.934).

What you must pay non-tipped staff in Michigan

Cooks, dishwashers, prep cooks, and cashiers or counter staff who don't get tips are paid like any other hourly employee:

  • At least $13.73 an hour for every hour worked, and at least $15.00 from January 1, 2027 (Michigan LEO, minimum wage). No tip credit applies.
  • The same goes for a tipped employee's hours in a non-tipped job, like a server's prep shift (DOL Fact Sheet #15).
  • Overtime is at least 1.5 times their regular rate for hours over 40 in a workweek. At $13.73 an hour, that's $20.595 (MCL 408.934a).
  • Can they share in the tip pool? Michigan's law leaves tips with the employee who receives them, who may choose to share them with another employee who is directly or indirectly part of the chain of service and whose duties aren't mainly managerial or supervisory (MCL 408.934d). It doesn't mention a pool that you require.

Worked examples (made-up numbers)

The names, hours and tips below are made up. The rates are Michigan's as of October 14, 2026.

A server's week: when you have to top up

Sam is a server paid the $5.49 cash wage. He works 30 hours in each of two weeks: a busy one with $480.00 in tips and a slow one with $160.00.


Busy week

Slow week

Hours worked

30

30

Cash wages (30 × $5.49)

$164.70

$164.70

Tips received

$480.00

$160.00

Cash wages + tips

$644.70

$324.70

Minimum for the week (30 × $13.73)

$411.90

$411.90

You pay on top

$0.00

$87.20

In the slow week, $160.00 in tips covers only part of the $247.20 tip credit (30 × $8.24), so you pay the difference by the regular payday: $411.90 − $324.70 = $87.20. In the busy week you owe nothing extra, and every dollar of tips is still Sam's.

A cook's week with overtime

Ana is a line cook paid the Michigan minimum wage, $13.73 an hour. Over five days she works 9, 10, 8, 9 and 9 hours: 45 hours in all.


Hours

Rate

Pay

Regular hours

40

$13.73

$549.20

Overtime hours (over 40)

5

$20.595 (1.5 × $13.73)

$102.98

Total

45


$652.18

Overtime is counted by the workweek, and hours can't be averaged across two weeks: a long week earns overtime even if the next one is short (US DOL, overtime). Bonuses can change the rate too; see Time clock, breaks and overtime: first-month payroll mistakes to avoid.

Tip pooling rules in Michigan

Michigan has its own tip-pool rules (MCL 408.934d): Tips remain the property of the employee who receives them, whether or not the employer pays the tipped wage. The law doesn't stop an employee from voluntarily sharing tips with another employee who is directly or indirectly part of the chain of service and whose duties aren't primarily managerial or supervisory. It doesn't mention tip pools that an employer requires; the only sharing it describes is voluntary sharing by the employee.

Federal rules apply too, and where the two differ, follow the stricter one (US DOL, tips):

  • The business, its managers and supervisors never keep employees' tips. A manager can't take anything from a pool; they may keep only tips for service they directly and solely provide. An owner with a real stake who helps run the business counts as a manager too.
  • A pool you require: federal law allows one, limited to staff who customarily and regularly receive tips when you take a tip credit. Michigan's own law describes only sharing that's voluntary (above), so get advice before you make a pool mandatory.
  • Card fees: you may reduce a card tip by the percentage the card company actually charges you, and no more (DOL Fact Sheet #15).
  • Service charges: under federal law, a mandatory service charge isn't a tip: money you share from one is wages, and it counts in the regular rate for overtime (DOL Fact Sheet #15). Michigan adds its own rule: Employers must give employees and consumers written notice of how they plan to distribute service charges. Gratuities and service charges paid to an employee are on top of, and do not count toward, wages due (MCL 408.934d).
  • Pay pooled tips out by the regular payday for the week or pay period (DOL Fact Sheet #15).

A House bill that would let employers require tip sharing passed the Michigan House in January 2026 and was in the Senate labor committee when we checked (Michigan House Bill 4492).

How to split a pool fairly, with a worked example: Tip pooling for new restaurant owners.

Overtime in Michigan

Michigan's overtime law draws the same line as the federal one (MCL 408.934a): non-exempt employees get at least 1.5 times their regular rate for hours over 40 in a workweek (US DOL, overtime).

A workweek is any fixed, recurring stretch of seven days that you choose, and hours can't be averaged across two weeks. There's no daily overtime, no double time and no seventh-day premium under Michigan or federal law, and weekend or holiday hours don't earn a premium by law.

For tipped staff, overtime is figured on the full minimum wage, not the cash wage (see the tipped section above).

Breaks in Michigan

  • Meal breaks: No specific Michigan rule found — federal rules apply (US DOL, state meal periods). The FLSA does not require meal periods. A bona fide meal period (typically 30+ minutes) is not work time (US DOL, breaks).
  • Rest breaks: No specific Michigan rule found — federal rules apply (US DOL, state rest periods). The FLSA does not require breaks. Short breaks an employer offers (about 5 to 20 minutes) are paid work time (US DOL, breaks).
  • Minors: Under 18: no more than 5 hours in a row without a meal and rest break of at least 30 minutes; a shorter break doesn't interrupt the 5 hours (MCL 409.112).

Other Michigan rules that affect pay

  • Paid sick leave: Under the Earned Sick Time Act, in effect since February 21, 2025, employees earn at least 1 hour of paid sick time for every 30 hours worked. An employer can cap use at 72 hours a year, or 40 hours at a small business (10 or fewer employees), unless it sets a higher limit. With accrual, unused hours carry over up to the same limits; an employer that gives the hours up front doesn't have to allow carryover (Michigan LEO, earned sick time FAQs).
  • Food handler training: A certified food protection manager is required, not a card for every employee. Who: at least one certified food safety manager per covered establishment (MCL 289.2129).

Earned sick time is paid at the higher of the employee's normal hourly or base wage and the minimum wage, and tips are left out of the normal wage, so a server's sick hour is paid at least $13.73. An employer can make a new hire wait 120 days before using it (MCL 408.963).

Local rates in Michigan

Michigan law bars cities and counties from requiring private employers to pay a minimum wage other than the state or federal one (MCL 123.1385). Separate sections of the same law bar local leave mandates (MCL 123.1388) and local rules on the hours and schedules an employer must give staff (MCL 123.1389). So the state's $13.73 minimum wage applies everywhere in Michigan, and there's no local rate table for Michigan.

How Mays helps

Mays runs the schedule, time clock, tip pool and payroll export for each location. For Michigan pay rules, that means:

  • Positions and wages. Give each position a default hourly wage, for example the tipped cash wage for servers and at least the minimum wage for cooks. Turn on Labor law compliance and Mays looks up each location's minimum wage from its address and warns you when a position's default wage, someone's hourly wage or a punch is below it, comparing tipped positions with the tipped cash wage when it has that figure. It never blocks the save. It switches to the new rate on January 1, 2027 by itself, and admins get a reminder 30 and 7 days before, listing the wages below the new rate.
  • A tip pool per location. Split pooled tips by hours worked, equally or by FTAR score, per pay period or day by day, and choose which positions receive. Michigan's law describes only tip sharing that's voluntary, so get advice before you run a pool your staff haven't agreed to. Until you pick positions under Who receives, the positions marked Tipped share the tips; if no position is marked, everyone who worked does, cooks included. So if you take a tip credit, tick Tipped position only on positions whose staff get tips, or pick them yourself. A punch with no position counts under its shift's position, or else the person's primary or only position at that location; with neither, its hours get no share, and the tip pool card shows how many punches that leaves out. Leave managers and admins out of the pool is on by default, so leave it on. The tips come from your connected POS at that location (Square or Union) or from tips synced with 7shifts time punches, and each person's share appears in the Tip Payouts report and the payroll export. With Labor law compliance on, Mays can take your card processor's fee out of card tips, but check Michigan's rule before you turn that on: the tip pool card links the official source. With Labor law compliance on, the card also lists Michigan's service-charge rule as a checklist, with its source.
  • The tip-credit make-up is yours to check. Mays doesn't compare a tipped employee's cash wages plus tips with the minimum wage, so check each workweek the way the server example above does.
  • Time clock and timesheets. Staff clock in on their phone, a shared kiosk or an NFC tag. Timesheets run by pay period. Overtime is counted by the workweek, and with Labor law compliance on, by any daily, double-time and seventh-day rule the location's state sets too, which Mays reads from its address; the schedule's labor cost, the reports and the pay summary all include it.
  • Payroll export. A standard CSV or a Gusto-format CSV with regular and overtime hours and pooled tips for each employee. A card surcharge you share with staff goes in as wages, not tips.
  • Minors. Turn on Labor law compliance and work rules for minors at a location, and Mays warns you when a shift breaks a minor's hours or time-of-day limits under federal law, and the auto-scheduler won't put a minor on one. It doesn't track minors' breaks yet, so build a minor's meal break into their shifts when you schedule them.
  • Food protection manager certificate. Turn on Labor law compliance and keep your certified manager's certificate in Mays with its expiry date. Each location shows whether someone there holds a valid one, and Mays reminds them and their managers before it expires.

Sources

Every figure on this page comes from these official pages, as they read on the date shown.

This page is general information, not legal advice. Laws change, and coverage rules (your business's size, whether federal law covers you) decide which of them apply. Check the pages above, and ask an employment lawyer or accountant about your situation.

Run Michigan payroll on the right numbers

Set each position's wage, turn on the tip pool with managers left out, and let the time clock count overtime by the workweek. Then payroll is an export, not an evening.

Start your free trial: 30 days, every module, no card needed. Setting up a tip pool? Read Tip pooling for new restaurant owners.