What Is a Pay Stub? A Guide for Employers and Employees
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A pay stub, also known as a payslip, or a paycheck stub, is a document that outlines the employees’ payment details for a period of time. Some states require employee pay stubs, some not—and they don’t always look the same.
Employees need pay stubs to verify payment information (and make sure they’re not getting underpaid), as well as for proof of employment. And employers must deliver complete pay stubs to avoid non-compliance penalties.
Fortunately, pay stubs are relatively straightforward: you’ll get everything you need from this article. We’ll define pay stubs, break down everything inside a pay stub, and cover some FAQs about pay stubs. Let’s dive in!
What is a pay stub?
A pay stub is a document that shows the employee’s payroll information for a specific pay period. It is also known as a paycheck stub, payslip, or wage statement.
Pay stubs contain everything regarding employee’s pay: total amount and net pay, pay rate, tax deductions (payroll taxes), employer contributions (to health insurance and other employee benefits), and additional information about the employee and employer.
Typically, the human resources (HR) department creates, organizes, and distributes pay stubs. Some companies use payroll software or a payroll service to generate pay stubs.
What does a pay stub look like?
Pay stubs come in two forms:
- Physical documents to paper check via perforation, if employees get paid with physical paychecks
- Digital documents available in the employee’s payroll software, if an employee receives their pay via direct deposit into their bank account
Who receives pay stubs?
All company employees receive pay stubs, regardless of whether they’re full-time or part-time. Independent contractors and freelancers receive invoices, not pay stubs. Check out our article on employees vs. independent contractors to learn about the difference.
Most full-time employees receive paychecks bi-weekly or monthly, which are simplified pay stubs that show net pay. Most companies keep detailed payroll information as a part of their bookkeeping and can provide pay stubs upon request.
Further reading: What is a full-time employee? And what’s the difference between full-time and part-time employees?
What are pay stubs for?
The primary purpose of a pay stub is to record and communicate the breakdown of an employee’s pay. Pay stubs help employes and employees catch and resolve discrepancies with employee pay. They also serve as a safeguard against underpayment.
Paystubs also help employees understand the taxes, tax deductions, and employer contributions that affect the amount of money they take home each pay period. Employees may also need to show paystubs to:
- Apply for housing
- Get a loan
- Show proof of employment
- Get a new job (note: states including Massachusetts, New York, New Orleans, Philadelphia, and Pittsburgh restrict employers from requesting to see a candidate’s prior pay stubs during or after the hiring process)
Are pay stubs mandatory?
No federal law requires employers to provide their employees with pay stubs—it’s up to the state laws. A few states don’t require employers to issue pay stubs:
- South Dakota
However, don’t be mislead: these states aren’t exempt from keeping payroll records. According to the Fair Labor Standards Act (FLSA), employers nationwide need to keep payroll records for each employee for a minimum of three years. Information used to calculate the wages (timetables, work schedules, time cards, time-tracking software info, wage deductions, and additions) should be kept for two years, as the U.S. Department of Labor may request to inspect them.
These FLSA standards apply to employers who hire non-exempt employees and earn $500,000 per year (or more) or are engaged in interstate commerce. Issuing pay stubs is mandatory for the rest of the states. Specific requirements vary from one state to the next, so consult your state’s unique regulations.
What information goes in a pay stub?
The requirements vary state to state, but most pay stubs include:
- Employer information: company name, address, contact, and Employer Identification Number (EIN)
- Employee information: full name, address, and Taxpayer Identification Number (TIN), Social Security Number (SSN), or Individual Taxpayer Identification Number (ITIN)
- Hourly rate: the employee’s current pay rate per hour (for hourly employees), including whether these rates differ during holidays
- Number of hours worked: total hours worked (for hourly workers) during the period on the pay stub
- Overtime hours worked: how many overtime hours the employee worked during the pay period (including their overtime pay rate if it differs from the regular hourly rate)
- Bonuses and rewards: additional employee compensation, usually monetary
- Paid time off (PTO): the number of PTO hours the employee used during the paid period
- Gross wages: the total, pre-tax amount of money earned before deductions (note: salaried employees’ salaries state the gross earnings or gross pay, so expect significant deductions for taxes and other benefits)
- Deductions: tax withholding (federal, state, local, FICA taxes, Medicare, Social Security), employee benefits (health insurance, life insurance, disability insurance), 401k payments, other retirement plans, and wage garnishments (to pay off debts as a result of court order/ other legal action)
- Back pay (or back wages): back pay is additional money added to an employee’s pay stub to make up for any mistakes made in previous pay periods
- Net wages: net wages, or take-home pay, is what’s left after federal income tax, state income tax, local income taxes, and other payroll deductions and contributions are made (note: pay stubs track of net pay for the noted period and the whole year)
How do you get a pay stub from your employer?
Most employers keep pay stubs (or similar payroll records) available upon request. All you have to do is request the information from your human resources department. Remember, employers need to provide employees with employment records (and pay stubs are the most common type of record). However, the FLSA’s federal law doesn’t officially require the pay stub, so those records may come in a different format.
States fall into one of two categories:
- Access states require employers to provide employees with some type of access to their pay stubs or payroll details, either in the form of a physical copy, or an electronic pay stub accessible via payroll software:
- New Hampshire
- New Jersey
- New York
- North Dakota
- Rhode Island
- South Carolina
- West Virginia
- Access/print states require companies to provide printed (or easily printable) pay stubs: they are like access states but must make pay stubs even more ac cessible
- New Mexico
- North Carolina
Employer penalties for withholding pay stubs
Local state laws determine the consequences of improper pay stub handling, so check with your local requirements to understand your state’s specifics.
Let’s benchmark against New York as an example. If a New York employer doesn’t provide the employees with correct pay stubs or fails to do it properly, employees are entitled to up to $250 per violation, totaling up to $5,000 per employee.
Pay stub FAQ
These are some of the most frequent questions people have regarding the pay stubs.
Is a pay stub the same as a paycheck?
A pay stub is not the same thing as a paycheck. Paychecks simply state the employee’s net compensation, while a pay stub elaborates on all the details related to the payment.
Is a pay stub the same as a W-2?
A pay stub is not the same thing as a W-2. W-2s is a tax form employers submit to the IRS to report employee wages.
How long do employers have to keep pay stubs?
Employers must keep payroll records for three years. If you need to access your pay stub (or equivalent payroll information), contact your employer’s human resources department, even if you quit the job.
Is a pay stub the same as an invoice?
A pay stub is not the same thing as an invoice. Independent contractors use invoices to bill companies after providing services. They do not receive pay stubs. Likewise, employees receive pay stubs but don’t receive invoices.
How long do employees need to keep pay stubs?
Employees should keep the paycheck stubs for a year or until they receive IRS Form W-2 and annual social security statement (and confirm that everything matches).
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