Pay stub requirements vary from state to state, so both employers and employees should be aware of them. In this blog post, we have compiled all the information you need to know about pay stub requirements in 2022.
Your employees are paid on time. But do you also provide them with a pay stub? In most places, it is not only acceptable business practice but also a legal requirement to provide pay stubs. Continue reading to find out the significance of pay stubs, the position of pay stubs under federal law, and state-specific pay stub requirements.
What Are Pay Stubs?
Pay stubs are the records of your earnings and expenses that you get from an employer. These documents will generally list the withheld taxes, how much you received in pay, and when you received the payment.
How Should A PayStub Be Filled Out?
Pay stubs list the hours worked and earnings for each pay period. In addition, payroll departments must provide employees with a statement of their gross salaries and net wages every payday.
Pay stub requirements vary by state but typically include:
- Gross earnings;
- Net pay after deductions from taxes or other payments made by the employer such as Social Security, Medicare, or 401(k) contributions;
- Regular Pay; and
- Overtime Pay.
Do Employers Have To Provide Pay Stubs?
Employers have to provide pay stubs in the following cases:
- There is a deduction of payroll taxes from an employee’s wages
- The law requires the employer to keep certain records and data on employees (e.g., Social Security numbers)
- An employee has requested a copy of their payroll information
Unlike W-forms, pay stub requirements in 2021 are more strict, specifically if employees request information about their wages or payroll data. If the employer fails to provide pay stubs in any of these cases, the government can punish them with fines and other penalties.
Do businesses have to furnish pay stubs under federal law?
The Fair Labor Standards Act (FLSA), which regulates minimum wage, overtime, child labor, and record-keeping rules for private-sector firms, is the federal legislation in dispute here.
The FLSA does require that businesses maintain accurate records of the hours worked and pay given to employees, according to the US Department of Labor. However, the FLSA does not mandate that employers give their staff pay stubs.
Therefore, federal law does not require pay stubs or check stubs. The drawback is that you have to “maintain accurate records of hours worked and wages paid to employees,” which is a requirement. Paystubs can assist you in fulfilling this responsibility.
Check your state’s laws for any obligations before you start issuing pay stubs.
Cost of Non-Compliance
Local laws determine the consequences and costs of non-compliance. In any case, an employer should let their employees review their pay stubs, even if they are not required to do so.
No Requirement States
Employers are not required to provide employees with a statement of pay information in the following states:
- South Dakota
Employers in the following states are required to provide employees with a statement summarizing every employee’s pay. However, a physical copy of the paystub is not needed. Instead, employers can give electronic pay stubs.
- New Hampshire
- New York
- North Dakota
- Rhode Island
- South Carolina
- West Virginia
These states require employers to provide a pay statement detailing an employee’s compensation. Pay stubs are not required to accompany every paycheck. However, employers must ensure employees can print electronic pay stubs.
- Colorado (requires both)
In states where particular electronic delivery methods are adopted, employee consent is mandatory. On top of that, when an employer in one of these states launches a paperless pay program, each employee must be entitled to opt-out of it if they want to receive paper pay stubs instead.
Hawaii requires employers to provide employees with written or printed pay statements detailing their pay information unless they agree to get their invoices electronically.
What Deductions Can Employers Make On Pay Stubs?
Employers may withhold a certain percentage of your payment from your paycheck for payroll taxes and other items governed by the Federal Insurance Contributions Act (FICA), such as Federal income tax and Social Security contributions. You might also see deductions made on the pay stub that you legally authorized or voluntarily authorized.
A legally authorized deduction can include food, lodging, transportation, child support, and alimony. Meanwhile, voluntary deductions may come in charitable contributions or insurance. Voluntary authorized deductions like these are permitted even if your pay drops below minimum wage as a result.
A company, however, cannot deduct expenses that are benefiting them. Furthermore, they cannot retroactively deny or adjust compensation based on poor performance.
What methods produce pay stubs in the best way?
- Put on the employee’s pay stub all the details needed by state law.
- Fill in the gaps if your state’s regulations aren’t comprehensive enough.
- Keep the pay stub requirements free of unnecessary information because doing so will probably make it more difficult for them to interpret the statement.
- Include details that can help you comply with the FLSA’s record-keeping obligations, such as the number of hours worked each day, your hourly wage, any withholdings from your pay, and the total amount of earnings paid out each pay period.
- Keep your pay stub layout uncomplicated and straightforward to understand. Flashy graphics have no place here.
- Consider providing your staff with a dictionary of pay stub terms. Give succinct explanations for abbreviations like FIT, FICA, Med, SS, SIT, and YTD as well as for terms like “Net Pay,” “Employer Contributions,” “Voluntary Deductions,” “Pretax Deductions,” and “After-Tax Deductions.” This could enhance how well-informed workers are about their income.
- Utilize payroll software that creates pay stubs automatically based on payroll information for the employee for the covered pay period.
What are the consequences of breaking pay stub requirements?
Employers who fail to comply with pay stub regulations may face penalties from their state.
For instance, it is a misdemeanor in California to refuse to disclose pay stubs. Additionally, there is a $50 civil fine for the employee’s first infraction. The fine rises to $100 for each further offense, with a cap of $4,000 possible (per employee).
Unless they paid their employees in accordance with the law, New York companies who fail to furnish pay stubs risk being held accountable for damages of up to $250 each day, per employee. The most that can be awarded in a civil action is $5,000 for each employee.
What If My Employer Doesn’t Give Me A Pay stub?
Employees may seek damages from employers for each violation of wage statement if employers do not provide an accurate and complete wage statement or if employers willfully fail to provide one.
Is It Illegal To Use Fake Pay stubs For Apartments?
Making fake paystubs is not legal and providing providing them as proof of income is against the law. The minute you use them to obtain housing, secure a loan, evade taxes, or avoid paying child support is equivalent to fraud.