I work for a retail clothing company. I had been at my job 1 week when my store manager was showing me how to process payroll. I had anywhere from
5-20 minutes overtime(not exactly sure) and he changed my punches so I was at a flat 40 hours. I am not salary, but considered an hourly manager. I think this is illegal and sat there in disbelief. He said I wouldn't miss the few extra dollars. It's not really the money, but if he does this in front of me what does he do when no one is around? I didn't say anything because I wasn't 100% sure that he couldn't do it, but I worked those extra minutes and should be compensated right?

The law does not specifically prohibit editing time clock punches.

The law says that non-exempt workers must be paid for all hours "physically" worked and overtime when applicable.

There is a provision for rounding. Many companies use the 8 minute rule. If a worker "physically" works 8 minutes of the 15 minute block, the worker would receive pay for entire 15 minutes.

For example:
A worker clocks in at 8:02AM. The worker would receive pay starting at 8:00AM.

A worker clocks in at 8:10AM. The worker would receive pay starting at 8:15AM.

I'm not certain if rounding is a cause for concern; but if it were that's how it'd work.

I suspect that your boss has not been "educated" on the legal aspects behind payroll. Many retail managers are not. Although I agree the boss could use additional "training", the rounding may be enough to negate the 20 mins you mention from the week.

My company doesn't round out the punches. If I clock in at 8:02 I start getting paid at 8:02.

You should discuss the issue with DLEG. Here is there contact information: http://www.michigan.gov/cis/0,1607,7-154-27673_27856-94126--,00.html.