A check stub is a receipt that shows how many hours an employee worked and how much they got paid.
Here’s a pay stub example.
If an employee receives a physical check, the check stub is attached to the rest of the check via a perforation—just like a ticket stub. These days, employees aren’t always paid by physical check.
Make check stubs available for your workers to look at, even if they get their check directly deposited into their bank accounts. The check stub serves as their official record, so there’s no misunderstanding.
Many employees like to keep a physical copy of their check stubs in case they ever need to review their pay or deductions.
It’s their confirmation that they were paid correctly. By quickly looking at his check stub, an employee can immediately see how much money is being deducted each week, such as for health insurance premiums.
This way, he can ensure that not too much is being taken out.
It’s also proof of income if he wants to apply for a loan or other form of credit. He might need this proof if he quits your company and gets a job elsewhere. That’s because requesting verification of pay is one way employers check to ensure what an employee says he got paid is what he actually got paid.
Are Check Stubs Required by Law?
There’s no federal law that mandates companies have to provide their workers with a check stub. However, many states have laws that require some form of written pay statement.
Here are the states that require written or printed check stubs to be given to all employees:
- New Mexico
- North Carolina
Here are the states that don’t have this requirement:
- South Dakota
These are the states that mandate that employees at least have some way of accessing information printed on a check stub:
- New Hampshire
- New Jersey
- New York
- North Dakota
- Rhode Island
- South Carolina
- West Virginia
Even if you happen to dwell in a state that doesn’t require check stubs, you’re still legally bound by the Fair Labor Standards Act to keep track of the hours your employees work.
How Do You Read a Check Stub?
Here are the various elements to a standard check stub:
- EMPLOYEE NAME AND ADDRESS: The full name of the individual getting paid.
- COMPANY NAME AND ADDRESS: This is your company’s name and address. You can add its phone number here if you want.
- IDENTIFYING INFO: Some businesses include an employee ID or Social Security number on the check stub to provide additional identification of the employee.
- PAY TYPE: This indicates if the worker was paid by the hour or is salaried.
- PAY DATE: The date on which an employee receives a check is the pay date. Companies often pay their employees on a regular schedule, such as every Friday.
- PAY PERIOD: The pay period is the timeframe an employee gets paid for. For example, a biweekly pay schedule means the worker gets paid every two weeks.
- HOURS WORKED: The hours worked is the time the employee spends doing his job. This varies for hourly employees. For salaried employees, a paycheck will usually cover all work completed within a 40-hour workweek.
- PAY RATE: The pay rate is what an employee makes per hour. For example, an hourly worker might earn $15 an hour for a 35-hour workweek. This means $15 is the pay rate.
- EARNINGS: Another word for earnings is gross wages. This is the full amount of money owed to an employee before expenses like taxes and deductions are taken out. Usually, workers can see not only the wages earned in the pay period covered by the check but also year-to-date information.
- WITHHOLDINGS: These are withholding for things like federal, state, and local taxes and Federal Insurance Contributions Act (FICA) tax.
- These taxes will later show up on an employee’s W-2 for tax filing purposes.
- DEDUCTIONS: Deductions are items a worker can choose to get deducted from his pay. An employee can choose to deduct contributions for a 401(k) or pensions, a healthcare savings account, or other benefits. Deductions held pre-tax (from gross income) have the advantage of not being included in tax calculations.
- NET PAY: Net pay is what a worker gets to take home after taxes, deductions, and other withholdings.
- EMPLOYER TAXES: The employer pays some taxes that the employee doesn’t have to, such as the Federal Employment Tax Act. As a result, some businesses include an employer tax section on their pay stub.
- EMPLOYER CONTRIBUTIONS: Employer contributions show how much the employer contributes towards benefits like retirement and healthcare.
- ACCRUED VACATION TIME: Some companies have a section that includes an employee’s accrued vacation, sick days, or paid time off.
FICA in a Check Stub
FICA is a payroll tax paid by both employees and employers to fund Social Security and Medicare. These are federal programs providing benefits for retirees, people with disabilities, and children of deceased workers.
The FICA law requires employers to withhold 6.2% Social Security tax, 1.45% Medicare tax, and 0.9% Medicare surtax when an employee earns more than $200,000.
Hourly vs. Salary
Hourly employees are paid by the hour. They’re legally entitled to receive overtime pay if they work over 40 hours in a single week. Salaried employees aren’t given overtime pay, but company-provided benefits are often more generous than those provided to hourly workers.
All hourly workers are considered non-exempt employees under the Fair Labor Standards guidelines.
Non-exempt employees aren’t exempt from being paid overtime. They must be paid time and a half for all hours worked over 40 in any given week.
For instance, if a worker puts in 65 hours in a single week, his compensation would be 40 x $15 for his regular 40 hours plus 15 x $22.5 for the 15 overtime hours.
Hourly employees are often not guaranteed a set number of hours of work per week unless covered by a labor contract.
An hourly employee’s hours per week may vary based on his or her weekly schedule. Sometimes, employees have a shift schedule that changes every week. This means their hours might change from week to week. These employees must be paid, at the least, minimum wage.
The minimum wage varies from state to state, and some counties and cities also have a range of rates. Companies must pay their hourly employees either the state or federal minimum wage, whichever is greater.
Net Pay of a Check Stub
The total amount a worker receives after all deductions are taken out is known as “net pay.” For hourly employees, the check stub should list the hours worked and the hourly pay rate.
For salaried employees, this amount is usually 35 to 40 hours a week. The pay stub should also include overtime if the worker is eligible and the rate and hours of any overtime worked.
How to Choose the Best Check Stub Generator
For various legal and practical reasons, you need to provide check stubs to every single employee who works in your company.
If you run a company and don’t partner with a payroll processing service, you must go through the tedious rigmarole of manually processing your payroll. This is not only time-consuming (especially if you have lots of employees) but also tedious.
Because check stubs are such an essential part of payroll, you must develop a highly efficient system to quickly generate them that doesn’t involve you doing them yourself. Instead of partnering with a payroll processing company that’ll charge you an arm and a leg, think about using a check stub generator.
A check stub maker service offers lots of benefits for your business, including reducing errors, saving time processing payroll, making employee payment records more accessible, and more.
If you choose the wrong pay stub creator, you’ll not only waste time—you’ll also needlessly add frustration to your workday.
That’s why you should let us be your check stub creator.
How To Make Pay Stubs
At PayStubsNow.com, you’ll get accurate and dependable documents delivered right to your email quickly and easily. It’s the best way to get pay stubs online. In just a couple of super easy steps, you can create your own check stubs that are immediately sent to your email.
You can even choose to buy hard copies if you so desire. All you have to do is to use our fillable fields to enter all the information you want to appear on the stub and hard copies will be on their way in minutes.
Then, choose one of three consummately professional-looking templates. After that, press the big green “CHECKOUT” button, and you’re done.
Our service is perfect for both employers and employees.
Check us out today!