A reader wrote to ask the following QuickBooks payroll question.
How can I change the hourly wage for employees (and their OT rates) in the middle of a pay week when using QuickBooks?
I have 54 union employees that I have to do this for due to an hourly wage pay scale increase.
Oh, and I will also need to change some of the company paid union fringe benefit amounts as well.
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Answer:
There are a couple of ways that you can accomplish this when using QuickBooks, however, because you are dealing with union hourly wage rates, it really depends on:
- Are you still working on contracts that will use the existing hourly rates of pay and fringe benefit amounts?
- Are the new hourly wage rates for contracts that you start between now and the next pay scale increase?
- Are the new hourly wage rates effective for all current projects as well as any new contracts between now and the next pay scale increase?
Some people would simply suggest that you use the existing Payroll Wage Item and manually split out the number of hours using two different hourly wage rates when you create the paycheck.
Other people would suggest that you Edit each QuickBooks Employee Record, going to the Payroll & Compensation Info tab and in the Earnings box select the existing Payroll Item Wage name and assign the new hourly wage rate – this gives you two instances of the same Payroll Wage Item with two different rates of pay assigned to it – QuickBooks will allow this (personally I think it is a flaw in the program) even though QuickBooks will not be able to determine which rate is should use when you select the payroll item in Timesheets and/or paychecks.
I do not recommend using either of the above methods as they are too error prone and do not leave you a reliable means of tracking what an employee was earning during a specific period of time.
The method that I recommend is to create new Payroll Wage Items and Company Contribution Items with the applicable rates of pay and hourly benefit amounts. Once you have created these items, edit each employee and add the new items to their Payroll & Compensation Info tab. When you enter time in the Weekly Timesheets, choose the old payroll item/pay rate for the applicable days and then choose the new payroll item/pay rate when they become effective.
Setting up QuickBooks in this manner makes the program work for you, instead of you having to always remember to manually make the pay rate changes.
Benefits include:
- A clearly visible audit trail for your Union Fringe Benefit Reports.
- Accurate pay checks.
- Less stress.
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Author’s Note:
Having to manually create new payroll items AND then update 54 employee records with new payroll wage items and rates of pay is a time-consuming process as you have to do each payroll item and employee one at a time.
Check out Wage Manager Solution, a QuickBooks integrated application designed specifically to automate this process.
Watch a 10 minute video which provides an overview of how Wage Manager Solution works.
A reader wrote to ask the following question:
We were just awarded a contract with the Department of Defense and have to pay our employees “prevailing wage” and submit certified payroll reports. I called Intuit Support to ask them about prevailing wage, certified payroll, and how to track the fringe benefits; they weren’t very helpful – they just told me that QuickBooks can produce the certified payroll report…….can you help me understand all this?
Answer:
Ok, let’s start with some basics:
- The Davis-Bacon Act of 1931 (a Federal Law) set wage rate requirements on government funded construction projects.
- All contractors & subcontractors who perform work on these public works projects, that have a value of $2,000.00 or more, are required to submit a certified payroll report on a weekly basis.
Prevailing Wage(s) rates are comparable to hourly wages PLUS hourly fringe benefit rates for the area in which the construction project is located in, type of construction it is, and the type of work employees are doing – carpenter, laborer, equipment operator, etc. Prevailing Wage Rates are found in the Contract Package and each employee must be classified and paid accordingly – these rates are often times higher than the hourly rate that you normally pay your employees.
A certified payroll report is a specially formatted payroll report, consisting of two pages:
- Certified Payroll Report – this contains information about who worked on the job, how much you paid them, etc.
- Statement of Compliance – this contains certain legal language and requires the original signature of a company official who is signing the document under penalty of perjury.
In your case, you will be required to file the U. S. Department of Labor Form WH-347 Certified Payroll Report, however, because this is a Department of Defense job – you will need to submit their Statement of Compliance (even though it has an expiration date of June 30, 2000).
Paying and tracking prevailing wage fringe benefits gets quite complicated, as they can be:
- paid to a Union on behalf of the employee
- paid to a bona-fide fringe benefit plan on behalf of the employee
- paid in cash to the employee
- or, a portion of the total hourly fringe benefit amount can be split between payments to a bona-fide plan with the balance in cash to the employee
Request our FREE 27 page eBook – 4 Ways Contractors Pay Prevailing Wage Fringe Benefits
Intuit was partially correct, QuickBooks does have an alternate/substitute Certified Payroll Report built into it – however, it is only available if you have an Enhanced Payroll Subscription AND you are using QuickBooks Premier (any flavor – Contractor, Accountant, etc) 2009 or 2010 OR Enterprise 9.0 and 10.0; but it is very different than the Federal WH-347 form.
What Intuit didn’t tell you – is that these prevailing wage projects require more than just the submission of a certified payroll reports, you may also be required to:
- submit EEOC/Work Utilization reports on a weekly, monthly or annually
- submit ARRA (American Recovery & Reinvestment Act) reports on a monthly basis
- generate Fringe Benefit Statements on a monthly basis (if you are paying the fringe benefits to the Union or a bona-fide plan)
- electronically file your certified payroll reports using Labor Compliance programs such as LCPtracker, TRS Consultants, Elation Systems, and others.
Watch a brief 10-minute video demonstrating how Certified Payroll Solution interfaces with QuickBooks to generate these reports.
