Minimum Wage Validation
ProPay automatically checks that tipped employees earn at least the applicable state or federal minimum wage. When you process payroll, the system calculates whether each tipped employee's combined pay (hourly wages plus reported tips) meets the minimum wage requirement. If pay falls below the threshold, ProPay prompts you to correct the shortfall before accepting the paycheck.
How the Validation Works
> Automatic check — no separate menu navigation required. > This validation runs automatically during paycheck processing at Payroll Main Menu > Paychecks > New Payroll. You do not need to enable it or navigate to a separate screen.
The minimum wage check applies when all of the following conditions are met:
- The employee is hourly (not salaried)
- The client has tip tracking enabled in Employer Setup
- The employee has reported tips for the pay period
- The employee has hours greater than zero
ProPay calculates: `(regular pay + tips) / hours worked`
If this amount is less than the applicable minimum wage for the employee's state, ProPay displays a warning.
Correction Options
When pay falls below the minimum wage, ProPay prompts you to choose one of two corrections:
| Option | What It Does |
|---|---|
| Adjust pay rate | ProPay increases the employee's regular pay for this paycheck so that the combined hourly rate (pay + tips) meets the minimum wage. This adjustment applies only to the current paycheck and does not change the employee's base pay rate. |
| Adjust tip amount | ProPay adjusts the reported tip amount. Use this if the tips were entered incorrectly. |
> Warning: If you dismiss the warning without correcting the shortfall, the paycheck may result in a minimum wage violation. Federal and state law require that tipped employees receive at least the applicable minimum wage when direct wages and tips are combined.
Federal and State Minimum Wages
ProPay maintains a table of minimum wages for all 50 states, the District of Columbia, and Puerto Rico. The system uses the higher of the federal or state minimum wage for each employee.
- Federal minimum wage: $7.25 per hour
- State minimum wages vary and are updated annually in the ProPay tax tables
- Some states (FL, NV) have mid-year rate changes; ProPay uses the rate effective on the pay date
States without their own minimum wage (AL, GA, LA, MS, TN, and others) default to the federal rate.
> Tip: ProPay updates minimum wage tables with each annual tax table release. If a state changes its minimum wage mid-year, install the latest tax table update to ensure accurate validation.
Tips and Warnings
> Tip: This check applies only to tipped employees. Non-tipped hourly employees are not validated against minimum wage during paycheck processing.
> Note: The federal minimum wage of $7.25 is also used in garnishment floor calculations (disposable earnings protection) and FICA tip credit calculations, but those are separate features.
Related Topics
- Computing Paychecks — Payroll entry and paycheck calculation
- Entering Payroll — Step-by-step payroll data entry
- Tips Against Minimum Wage — Enable the minimum wage check in Employer Setup
- Employer Setup — Configure tip tracking for a client
- Employee Setup — Set employee pay rates