When local minimum wages began cropping up several years ago it was clearly understood that this was going to be an area that could cause complications for payroll. Employees that worked in different cities with different minimum wages would require very accurate accounting of hours worked. But now it seems that local minimum wages are expanding their sphere of influence in payroll. Beginning July 1, 2016 when calculating the amount of disposable income that can be subject to a garnishment in California the payroll department must take into account the local wage paid as well as the state minimum wage. It must base the calculation on the higher of the two. California is the first state that has passed this type of legislation but will it be the last?
Many other states have local minimum wages including New Mexico, Illinois, Maryland, and Washington to name a few. And with the movement growing to increase the minimum wages on the local level because state legislatures and the federal government have not moved on this issue it may be only a matter of time before all states with local minimum wage rates will require the same type of calculation as California. I personally am in favor of the higher minimum wages, especially in more expensive cities. And the fact that the federal minimum wage hasn’t changed in nine years is simply silly. But until the federal government moves on this, payroll will have to deal with the fallout of complying with dozens of local wages and the changes to rules to accommodate them.