Specifying an alternative minimum wage rate for tipped employees

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When you enter a payroll check for a tipped employee, the application checks to make sure that the minimum wage requirement is met for tipped employees in the employer's business jurisdiction. It uses whichever is the highest rate, be that the federal, state, county, or city rate. However, in certain situations, you may need to specify alternative minimum wage rates for certain tipped employees due to their job classification or for other reasons. To handle such situations, you can set an alternate rate for a tipped wage payroll item that you can use for all or just some of a client's employees.

Situations that require a non-conventional minimum wage rate

  • Albuquerque, NM allows employers to pay $1 less per hour if they provide health care or child care benefits valued at $2500 or more.
  • New York state has a multi-tier minimum wage rule, which means that the size of the employer, the location of the employer, and the employee's job classification all determine the minimum wage rate.
  • Wyoming allows employers to pay a reduced minimum wage for certain job classifications.

Setting up the tipped pay item

  1. Follow the usual steps for creating and adding a payroll item, starting by choosing Setup > Payroll Items.
  2. In the Calculation type field of the Main tab, choose Hourly rate.
  3. In the Special type field, choose Tipped wages. The Alternate minimum wage field then becomes available.
  4. To set the default rate to be used for all new employees, specify that amount in the Alternate minimum wage field. Otherwise, you can leave it set to $0.00 and set the amount for individual employees, as described in the following section.

    Note: If you are modifying the rate of an existing tipped pay item that is active for one or more employees, you'll need to update the pay item on each employee, as described in the section below.

  5. Continue to enter information for the pay item, as needed, and then click Enter.

Setting up the new pay item on an employee

  1. Follow the usual steps for adding a payroll item to an employee, starting by choosing Setup > Employees.
  2. Select the employee for whom you want to add the new tipped wage pay item, and click the Edit button.
  3. Mark the checkbox for the new pay item and then click the Ellipsis button to open the Employee Payroll Item Settings dialog for this pay item.
  4. In the Alternate minimum wage field, enter the minimum wage amount to use for this employee and then click OK. If you leave this field blank, the application will use the default rate.
  5. Make any other necessary changes to the employee record, and then click the Enter button to save it.

Using the new alternate minimum wage amount

If an alternate minimum wage amount has been added for a pay item that uses the Tipped wages special type, when that pay item is used on a payroll check, the application determines whether or not the payroll check meets that specified (alternate) minimum wage rate. See the Alerts and Notifications - Minimum Wage Requirements screen.

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