Understanding Minimum Wage Requirements for Piece Rate Processing
When you pay employees using the piece rate method, you must verify that each employee is paid enough so that they meet the legal minimum wage requirements that are defined by the federal government. If the minimum wage rate is higher in your state than the rate that is determined by the federal government, you must verify that each employee meets the state's minimum wage requirements.
Companies use minimum wage laws to ensure that employees are paid at or above a specified pay rate for each hour of labor that they perform. When you pay an employee using piece rate processing, you do not necessarily pay the employee an hourly wage. Therefore, you must determine whether the pay that an employee receives for completing a specified number of pieces, along with any other wages received, meets or exceeds the minimum wage when the total is divided by the number of hours worked.
Using timecard automation rules and functions, the system can calculate whether an employee meets the minimum wage requirements. If an employee does not meet the minimum wage requirement, the system automatically creates additional timecards to ensure that the employee does meet the wage requirements.
To accurately calculate minimum wage information, you must:
Enter the federal minimum wage rate in the default value for data item FMRT (Minimum Wage Rate).
Set up state minimum wage rates if any states in which the organization does business has a minimum wage rate that is higher than the federal rate.
Set up employee groups that include all of the employees who are paid using piece rate processing.
Set up timecard automation rules to calculate minimum wage information.
You also need to set up:
Piece rate pay type.
Employee information.
Time Entry MBF processing option.
When setting up piece rate processing, you also need to set up a piece rate pay type that is usually pay type 35. Use the Pay Types, Deductions, Benefit program (P059116) and set the pay source to B. Anything other than B is an hourly rate.
Use the Basic Compensation form in the Employee Master Information program (P0801) to set the pay class to P (not H or S).
Set these processing options on the Pay Rates tab in the Time Entry MBF program (P050002A) to:
Pay Rate: Blank
Piece Rate:P (the F060116 table) or E (the F06918 table).
The system overrides the value for the Piece Rate field unless the value for the Pay Rate field is Blank. Use this version for time entry. Also use this version in the Payroll Cycle Workbench (P07210). When a version is set up for Piece Rate, then you need to specify that version when using any time entry program.