As Michigan businesses prepare for 2025, several state and federal legal changes with associated deadlines are on the horizon that will significantly impact operations, payroll, and compliance requirements. From increases in overtime thresholds to revamped minimum wage structures and expanded sick leave requirements, business owners need to start planning now to ensure a smooth transition into the new year.
Let’s discuss the key deadlines and changes you need to know, along with practical steps to help your business prepare. Whether you’re running a small retail shop, a growing manufacturing company, or a professional services firm, these updates will affect how you operate in 2025 and beyond.
Major Changes to Overtime Pay Requirements
A significant change coming in 2025 affects how businesses across the country must handle overtime pay for salaried employees. The U.S. Department of Labor’s new overtime rule substantially increases the minimum salary threshold for overtime exemptions. Starting January 1, 2025, to classify an executive, administrative, or professional employee as exempt from overtime, you’ll need to pay them at least $1,128 per week ($58,656 annually)—a notable increase from current requirements.
The rule also affects highly compensated employees, raising their minimum annual compensation to $151,164. This is particularly important for businesses that employ specialized professionals or higher-level managers who have traditionally been exempt from overtime requirements.
What This Means for Your Business
To prepare for these changes, you should:
- Review all salaried positions currently classified as exempt
- Identify employees who fall below the new threshold
- Decide whether to increase salaries to maintain exemption or reclassify positions as non-exempt
- Revisit job descriptions to confirm employees fall within the exempt classifications
- Budget for potential increased payroll costs
- Plan for any necessary changes to timekeeping systems
Michigan’s New Minimum Wage Structure Coming February 2025
Following a Michigan Supreme Court decision in July 2024, significant changes to the state’s minimum wage law take effect February 21, 2025. The base minimum wage will reset to $10.00 per hour plus an inflation adjustment (to be calculated by the state treasurer based on July 2024 economic data). This marks the beginning of a structured series of increases that will unfold over several years.
Important Changes for Tipped Employees
The ruling brings particularly significant changes for restaurants and other businesses employing tipped workers. Starting February 2025, tipped employees must receive at least 48% of the standard minimum wage—a major shift from the current system. This percentage will increase annually until 2029, when the separate tipped wage system will be eliminated entirely and all employees must receive the full minimum wage regardless of tips.
Planning Ahead
To prepare for these changes, business owners should:
- Review and update payroll systems before February 2025
- Adjust budgets to account for increased labor costs
- Communicate changes to affected employees
- Consider potential adjustments to pricing or operations to offset increased costs
- For businesses with tipped employees, develop a long-term strategy for the gradual elimination of the tip credit
Enhanced Paid Sick Leave Benefits Take Effect
The Michigan Supreme Court’s ruling also revives the original Earned Sick Time Act, bringing more comprehensive sick leave requirements for businesses. Under these restored provisions, employees will earn one hour of paid sick time for every 30 hours worked, with different maximum accruals based on company size.
New Requirements Based on Business Size
For larger businesses (10 or more employees):
- Must provide up to 72 hours of sick time annually
- Employees can carry unused time into the next year
- Time can be used for personal illness, family health needs, medical appointments, and domestic violence-related issues
For smaller businesses (fewer than 10 employees):
- Must provide up to 40 hours of paid sick time
- Must allow an additional 32 hours of unpaid sick time
- Same carryover and usage provisions apply
Key Steps for Implementation
To comply with these expanded requirements, your business should:
- Create or update sick time tracking systems
- Review and revise current paid time off policies
- Prepare required notices for employees
- Train supervisors on the new requirements
- Update employee handbooks and related documentation
Corporate Transparency Act: January 2025 Deadline Approaches
If your business was established before January 1, 2024, an important federal deadline is coming: you must file your initial beneficial ownership report with the Financial Crimes Enforcement Network (FinCEN) by January 1, 2025. This requirement, part of the Corporate Transparency Act, affects most small and mid-sized businesses in Michigan—even single-member LLCs.
What You Need to Report
Your beneficial ownership report must include detailed information about individuals who either:
- Exercise substantial control over your company, or
- Own or control 25% or more of your company’s ownership interests
The information required includes each beneficial owner’s:
- Full legal name
- Date of birth
- Current residential address
- Identifying document information (such as passport or driver’s license numbers)
Getting Ready for Filing
With January 2025 quickly approaching, businesses should be gathering the required information for their filing, especially for someone who own multiple businesses. We recommend:
- Identifying all individuals who qualify as beneficial owners
- Collecting required personal information from each owner
- Ensuring your business records are up to date
- Maintaining careful documentation of your filing
- Setting up a system to track future changes that would require updated filings
Taking Action: Preparing Your Business for 2025
These new requirements—from overtime thresholds and minimum wage increases to expanded sick leave benefits and FinCEN reporting—represent significant changes for, and impose important obligations on, Michigan businesses. The complexity of these changes calls for careful planning and implementation starting now.
We recommend working with experienced legal counsel to ensure your business is fully prepared for these transitions. Dalton & Tomich can help you navigate these changes, update your policies and procedures, and help implement necessary compliance measures. Please contact Zana Tomich for assistance.
