Every January brings with it a host of regulatory changes employers and their payroll departments have to accommodate. This year is no exception. As of January 1, some 19 states have new minimum wage requirements that affect multiple aspects of payroll processing.

California, Florida, New Jersey, New York, and Vermont are among those 19 states. Their new minimum wages will not only affect the amount of money some hourly workers make, but they will also affect wage garnishments and overtime exemptions.

Unfortunately, federal and state regulations don’t always agree. The many conflicts this reality creates are a source of confusion to payroll departments, which is one reason BenefitMall recommends outsourcing payroll to a third-party provider.

Wage Garnishments for 2019

Federal law doesn’t allow a worker’s pay to be garnished unless his or her disposable earnings are at least 30 times the federal minimum wage, which currently stands at $7.25 per hour. That means an employee must earn at least $217.50 in weekly disposable income before wage garnishment can begin.

That’s pretty straightforward. However, some states are not content with the 30X requirement. Bloomberg BNA explains that a few states require disposable income to be as high as 40 or 50 times the federal minimum wage. Other states make their wage garnishment calculations based on state minimum wage rather than federal. California is one such state.

Wage garnishment in the Golden State cannot begin until a worker earns at least 40 times the state minimum wage in disposable income. Unfortunately, state minimum wage in California isn’t uniform. It varies based on employer size.

It’s even worse in New York, where there are different minimum wages based on company size and location. Smaller companies have one minimum wage, larger companies have another, and companies located in three New York counties have yet another minimum wage. Trying to calculate wage garnishments across multiple jurisdictions in New York can be a nightmare.

Overtime Pay and Exempt Employees

Of course, higher hourly wages impact overtime pay. Federal law requires employers to pay non-exempt hourly workers one-and-a-half times their regular hourly rate for any hours worked in a single week in excess of 40. This is no big deal for regular hourly workers. It could be problematic in determining exemptions for executives and other professionals.

Executives and professionals are exempt from overtime requirements under federal law as long as they make it least $455 per week ($23,660 annually). However, the regulations in some states supersede federal regulations. Alaska is one example.

In that state, executives and other professional workers must earn at least twice the state minimum wage in order to be exempt from overtime. Because Alaska’s minimum wage is now $9.89, executives must earn at least $791.20 weekly ($40,934 annually).

In Colorado, exempt employees only have to be salaried and earn in excess of state minimum wage. That works out to $23,088 annually. Moving on to New York, the lack of minimum earnings leaves executives and professionals subject to federal standards.

A Cornucopia of Confusion

We can continue dissecting the rule changes in all 19 states, but the point is made well enough with the examples cited here. The fact is that differences between federal and state laws create a confusing situation for employers with multi-state operations.

If your company employs workers in multiple states, now might be a good time to consider outsourcing payroll. A payroll services provider offers expertise and the latest software solutions that make payroll comparatively easy and a lot more accurate. Let the professionals handle it so your company can focus on its core products and services.