Which Department is In Charge of Minimum Wage Changes?

Minimum wage. It’s a hot topic this year as many states and local jurisdictions set their own rates and rules. Changes impact many departments - payroll, wage and compensation, human resources, and labor cost analysis. Where do the responsibilities for tracking minimum wage changes - making sure rates are implemented correctly and accounting for future changes - fall? We’ve broken down three departments that could be impacted and responsible for minimum wage changes here:

Payroll

The case can be made that minimum wage changes are the responsibility of the payroll department. After all, the payroll department makes sure that locality-based rules for withholding tax settings are taken into consideration. Can payroll leverage its knowledge to manage minimum wage, as it is also location-based and impacts the paycheck? With hundreds of minimum wage locations, rules, requirements, and variations of those requirements being implemented by 2022, how will the payroll department stay on top of future changes? Payroll must make sure that each and every rate is accurate, every time. Lastly, the payroll department is already responsible for wages, withholding taxes, deductions, record keeping, compliance, bonus calculations, and the list goes on - do the people in payroll really have time to track minimum wage as well?

Wage and Compensation

Determining pay scales, budgeting for compensation, and keeping an eye on the market to ensure a company stays competitive for potential employees all fall under the wage and compensation department. Researching minimum wage rules helps manage the labor cost for the company, future budgeting, and directly affects the bottom line.

But is the wage and compensation department really the right group to take control of implementing minimum wage? Are the tools in place to easily identify which minimum wage rules apply for your work locations? How can you confirm you are paying the right rate for both the employee and the company’s benefit?

Human Resources

The human resources department is responsible for managing employees within the organization. They are usually tasked with cultivating and keeping great talent. This could include compensation packages, bonuses, or extra perks. If the human resources department is tasked with hiring enough food service workers to run a restaurant, chances are they will need to what the minimum wage rates are, at the very least. Sharing of human resources rate knowledge with the payroll department is key.

Conclusion

Whichever department is in charge of minimum wage, it's important you stay compliant and up to date on minimum wage changes.