How Employers Can Avoid the Pitfalls of Michigan’s Wages and Benefits Act

Matthew Worley, Esq.

In order to avoid hefty fines, penalties, and even criminal liability, all employers and business owners should be familiar with Michigan’s Payment of Wages and Fringe Benefits Act.  This law details how and when employers must pay wages and fringe benefits to employees, and also prohibits certain actions by employers regarding these payments.

Where employers commonly run afoul of the Act is when an employee is terminated or resigns.  The typical scenario involves deductions by the employer from an employee’s paycheck – without the approval of the employee.  The Act requires that, prior to any deductions from wages, the employee must affirmatively consent in writing to the deduction.  As can be imagined, obtaining consent to reduce a terminated employee’s final paycheck can be, to put it mildly, difficult.

For example, if an employee is terminated but has in his possession a laptop owned by the company that is not returned, the employer cannot automatically deduct the cost to replace the laptop from the last paycheck without the employee’s written consent.  The employer still has a right to get the laptop back, but they have to pursue other means to get it, rather than automatically deducting its cost from wages owed to that employee.

Any employee who believes that their employer has violated the Act may file a complaint with the Michigan Department of Licensing and Regulatory Affairs.  Upon a finding that the employer did violate the Act, remedies include payment of all wages and benefits due the employee in addition to penalties, damages, attorney fees, costs, and even criminal charges in certain circumstances.

The Act contains many other provisions that employers should be aware of including maintenance of employee and payroll records; what to do with an employee’s final paycheck if they pass away; and payment of fringe benefits.

If you are a business owner and have questions about the requirements of this Act, or any other laws affecting your business, contact the experienced attorneys at Fausone Bohn, LLP at (248) 380-0000 or online at www.fb-firm.com.