More than half of the United States workforce has experienced a paycheck problem at some point or another. Many workers also reported that they find pay stubs challenging to read or understand.
Believe it or not, some states don’t have laws requiring that employers provide employment pay stubs to employees. States like Alabama, Arkansas, and Florida leave the choice up to the employer.
Even though some states don’t have to provide them, though, federal law has very clear requirements for what must appear on payroll records.
Keep reading to learn about all the essential information that must appear on an employee pay stub.
What Is a Pay Stub?
A pay stub is proof of payment. A work pay stub must itemize an employee’s pay both for that particular period and their year-to-date earnings total. In that total, the take-home pay must be identified as well.
Pay stubs detail deductions from items like tax, 401k, and health benefits.
A pay stub can come in both electronic and paper form.
Many employers are overwhelmed at the idea of creating pay stubs, which is probably why a lot of workers find them difficult to navigate. Using a check stub maker is a great way to ensure you include the required information, listed clearly and concisely.
Federal Pay Stub Laws
The Fair Labor Standards Act (FLSA) doesn’t require employers to provide pay stubs to their employees.
Over half of the United States have taken it into their own hands and made pay stubs a requirement for employers. The FLSA does regulate issues like payroll record keeping, and those requirements are strict.
States like New York and California passed their own laws, requiring employers to provide regular statements about withholding and pay.
Let’s take a look at some standard information required for pay stubs.
The total amount paid to an employee before deductions are taken out is the gross pay. Gross pay gets calculated differently, depending on whether an employee is paid hourly or yearly.
Gross pay should appear in 2 separate columns. One shows the gross pay for that pay period, and the other provides year-to-date gross pay.
A pay stub indicates hours worked for an hourly worker. This information is crucial as it details whether or not an employee has been paid for the correct amount of hours in a pay period.
A non-exempt employee can work various types of hours, like regular, overtime, and double-time. Their stub would show each kind of hour worked on separate lines, to avoid any confusion. Pay rates should get reflected accordingly, too.
If employees earn any personal time, holiday pay, bonuses, or advances, their employment pay stub should reflect that information too.
Deductions, Taxes, and Contributions
A pay stub must itemize any deductions taken from an employee’s earnings. Just like gross pay requirements, employment pay stubs must show deductions from that pay period in addition to year-to-date deductions.
Deductions can be the most difficult component of a pay stub because deduction codes aren’t always clear, and different states have different tax requirements.
Taxes that get deducted and must be reflected on pay stubs include social security tax and state and local income taxes.
The amount of federal tax that gets deducted depends on the employee’s tax bracket. State tax varies from state to state, and some states have no income tax at all.
Some areas and cities, like New York City, set their own local taxes too.
Any employee contributions towards retirement plans or insurance premiums must be listed as well.
Even though employer contributions also appear on an employment pay stub, they’re not deducted from gross pay. They reflect the amounts that employers contribute to things like social security tax.
Net pay is also referred to as “take-home pay.” It’s the amount employees receive in their paychecks or their bank accounts.
Net pay refers to the amount left over after deductions from their gross pay. Just like the other components, pay stubs must reflect net pay for that period and the year-to-date.
To reiterate, here are all the items an employee pay stub should include:
- Beginning and end dates of that pay period
- Total gross earnings
- Net pay (take-home-pay after deductions)
- State taxes withheld
- Federal taxes withheld
- Local taxes withheld
- Any deductions
- Any contributions
- Wage garnishments (like child support)
- Total deductions
- Year-to-date earnings
- Total number of hours worked (including different types of hours worked)
Federal Payroll Records Requirements
While the FLSA doesn’t dictate national requirements for pay stubs, it does require that employers keep accurate records of wages paid and hours worked for all their employees.
If an employee requests a copy of their payroll records, FLSA’s record-keeping requirements state that employees be granted access to those records.
Most states do require that the information is available to employees, but not necessarily as a paper pay stub.
Electronic data is sufficient in most states.
Here is a list of information required in payroll records:
- Employee’s full name and SSN
- Address, including the zip code
- Birthdate (if younger than 19)
- Occupation and sex
- Hours worked each day
- Total hours worked each week
- The basis on which wages are paid
- Regular hourly pay rate
- Total straight-time earnings
- Total overtime earnings
- Any additions to or deductions from employee wages
- Total wages paid every pay period
- Date of payments
- Pay period covered by the payment
Employment Pay Stubs Make Everyone’s Life Easier
Employment pay stubs aren’t required on a national level, but access to payroll records are.
Most states have enacted their requirements for employers to provide pay stubs, either electronically or in paper form, to their employees.
Because most working Americans find a mistake on their paycheck at some point or another, it’s important to check those pay stub details like hours worked and deductions to ensure the information and pay are accurate.
If you’re overwhelmed by the idea of implementing pay stubs into your business, there are plenty of pay stub makers that can do the job for you.
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