"So if the husband is a W-2 employee"

Let's stop at this part: A Partner paying themselves for their LLC work through payroll is making a mistake. There is no Payroll for the partners.

"both the husband and wife are partners in a multi member LLC Partnership (wife is not also a w-2 employee)"

Good, because if she is a partner, she is not an employee.

Are you sure this is not an LLC elected to be treated as an S Corp?