QuickBooks Payroll Tip – Changing Hourly Wage Mid-Week

Frequently QuickBooks users have to change the hourly wage for employees and their OT rates as well, in the middle of a pay week. This frequently happens when a company has union employees and have to do this for due to an hourly wage pay scale increase which can also require that they need to…

Frequently QuickBooks users have to change the hourly wage for employees and their OT rates as well, in the middle of a pay week. This frequently happens when a company has union employees and have to do this for due to an hourly wage pay scale increase which can also require that they need to change some of the company paid union fringe benefit amounts as well.

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:

  1. Are you still working on contracts that will use the existing hourly rates of pay and fringe benefit amounts?
  2. Are the new hourly wage rates for contracts that you start between now and the next pay scale increase?
  3. 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 pay item in Timesheets and / or paychecks.

I do not recommend using either of the above methods as they are too error pron 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 Contributing 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.

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 specifically designed to automate this process.