California’s minimum wage will change to $9.00 per hour on July 1, 2014. This change has already been pre-programmed into your software in the State Tax Rate file:
The 2013 Year End Update included a change to how minimum wage adjustments are handled when the minimum wage changes in the middle of a pay period.
Previously, the program only kept track of one minimum wage rate that is currently in effect. When the rate changes, that rate would be updated on the date it is scheduled to go into effect. This meant that all minimum wage verifications done after the new rate went into effect would be calculated at the new minimum wage, regardless of when the work was actually performed. So when the Create Checks option is used from Daily Payroll, the new minimum wage was used for the entire check, including the dates prior to when the rate change goes into effect.
With the 2013 Year End Update, a second minimum wage rate was added to the State Tax Rate file, along with effective dates for each rate. This allows the program to apply the correct minimum wage to each line item during these pay period that include a rate change.
Here is a screenshot of a payroll check that shows the different adjustments made before and after a new rate goes into effect:
In this example, the piecework earnings are the same on two different days, and the minimum that the employee should make is $80 on June 30th, and $90 on the July 1st. The minimum wage total at the bottom is correct ($170) and the program has made two different adjustments, $17.50 for the 30th and $27.50 for the 1st.
Labor Contractor Report Limitation
The Piecework Minimum Wage amount that prints on the Labor Contractor Report is based on doing a simple calculation of the total hours on the check times the minimum wage; the minimum wage that will be used will be the new rate. Here is an excerpt of the report, where the minimum wage total shows $180 (20 x $9.00) instead of $170 (10 x $8.00 + 20 x $9.00):
Therefore, while employees will be paid based on the correct minimum wage in effect for the days they worked, the Labor Contractor Report will overstate the minimum wage that the employee should have been paid. You may want to include a note with the labor contractor report for the coming pay period with the minimum wage rate change explaining that this amount may not be correct because it is based on the new $9.00/hour rate, and some wages were paid for work performed when the $8/hour rate was in effect.