Pay Stub Law 2019/2020

Do employers have to provide pay stubs?

There is no federal law that requires employers to provide employees with pay stubs. In legislation, pay stub law falls under the Fair Labor Standards Act (FLSA). Beyond that, employers are subject to state legislation and compliance.

For businesses who employ staff across state lines, running the payroll compliantly can be a challenge, due to the various rules and requirements for each state. This guide will help you identify whether you are operating in an “access state”, an “access/print” state or something altogether different. But first, we’ll start at the federal level, as these rules apply to all US businesses.

Federal Payroll Law

What is the Fair Labor Standards Act?

The Fair Labor Standards Act (FLSA) is a federal law which establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments.

When it comes to pay stubs, we’re concerned with the recordkeeping aspect of this Act. Because, while the FLSA requires that employers keep accurate records of hours worked and wages paid, this doesn’t mean employees don’t have a right to see their wages information.

2019 FLSA proposed update

On April 1, 2019, the U.S. Department of Labor announced a proposed rule to revise and clarify the responsibilities of employers and joint employers to employees in joint employer arrangements.

The Fair Labor Standards Act (FLSA) allows joint employer situations where an employer and a joint employer are jointly responsible for the employee’s wages. This proposal would ensure employers and joint employers clearly understand their responsibilities to pay at least the federal minimum wage for all hours worked and overtime for all hours worked over 40 in a workweek.

The Department proposes a clear, four-factor test – based on well-established precedent — that would consider whether the potential joint employer actually exercises the power to:

  • hire or fire the employee;
  • supervise and control the employee’s work schedules or conditions of employment;
  • determine the employee’s rate and method of payment; and
  • maintain the employee’s employment records.

The proposal also includes a set of examples for comment that would further help to clarify joint employer status.

As of May 2019, we are still awaiting the outcome of this proposal.

Who is affected by the Fair Labor Standards Act?

The FLSA applies to employers with annual sales equal to $500,000 or more, or who are engaged in interstate commerce. This may sound restrictive, but the FLSA covers almost 90% of US workplaces.

Every employer covered by the FLSA must keep certain records for each non-exempt worker. The Act requires no particular form for the records, but does require that the records include certain identifying information about each employee, as well as data about the hours worked and the wages earned.

The FLSA requires this information to be accurate. Basic records that an employer must maintain include:

  1. Employee’s full name and social security number
  2. Address, including zip code
  3. Birth date, if younger than 19
  4. Sex and occupation
  5. Time and day of week when employee’s workweek begins
  6. Hours worked each day
  7. Total hours worked each workweek
  8. Basis on which employee’s wages are paid (e.g., “$9 per hour”, “$440 a week”, “piecework”)
  9. Regular hourly pay rate
  10. Total daily or weekly straight-time earnings
  11. Total overtime earnings for the workweek
  12. All additions to or deductions from the employee’s wages
  13. Total wages paid each pay period
  14. Date of payment and the pay period covered by the payment

How long do employers need to keep employee information?

Under the FLSA, employers need to keep records for at least three years. This includes payroll information, collective bargaining agreements, sales and purchase records. The records may be kept at the place of employment or in a central records office.

Records on which wage calculations are based (time cards, schedules, records of wage additions/deductions) should be retained for two years. These records must be open for inspection by the Department of Labor’s representatives, who may ask the employer to make extensions, computations, or transcriptions.

State Pay Stub Law

Most states have their own laws requiring employers to provide access to employee pay stubs. Broadly speaking, when it comes to pay stub requirements, there are three types of state:

  • States with no requirements
  • Access states
  • Access/print States

If you’re operating in a state like Georgia and Florida, who don’t have their own requirements, you don’t have to provide any kind of paycheck stub.

States like New York and Illinois require you to provide some type of stub, either electronic or paper.

Finally, there are access/print states, like California and Texas. These states allow you to provide either an electronic or paper stub, but employees who get electronic stubs must have an easy way to print or access them.

You also need to figure out whether you’re in an “opt-in” or “opt-out” state:

  • In opt-out states, businesses must get employees’ consent before changing the way they deliver paycheck stubs and must adhere to the previous method if an employee prefers
  • In opt-in states, employers must offer paper stubs unless an employee chooses to get the stub electronically

What information needs to be on a pay stub?

The information you are required to provide on a pay stub depends on the employment laws in your state and your industry. Here’s an example of what a paycheck stub in Pennsylvania must include, according to PA Admin Code 34:231.36:

  • Wages
  • Hours worked
  • Rates paid
  • Gross wages
  • Allowances (if any) claimed as part of the minimum wage
  • Deductions
  • Net wages

This will, of course, vary from state to state and by industry. The best thing to do is to consult your payroll provider to ensure your pay stubs are compliant with local, state and federal laws.

Cost of Non-Compliance

Consequences for non-compliance vary, depending on local law. But it’s best to avoid a Department of Labor (DOL) audit. For example, in New York, employees who do not receive proper pay stubs can be entitled to recover damages of up to $250 per violation, up to $5,000 per employee.

Even if an employer isn’t required to provide employees with pay stubs, should an employee request access, it’s good practice to allow them to review their records.

Paycheck Stub Requirements By State

No requirement states

The following states do not require employers to provide a statement that details an employee’s pay information. An employer may choose to deliver a pay statement in an electronic format, but they don’t have to.

  • Alabama
  • Arkansas
  • Florida
  • Georgia
  • Louisiana
  • Mississippi
  • Ohio
  • South Dakota
  • Tennessee

Access states

The following states require employers to provide employees with access to a statement that details their pay information. It is not required that the pay statement be a physical copy. An employer can comply with the pay stub requirements in these states by providing an electronic pay stub that employees have access to.

  • Alaska
  • Arizona
  • Idaho
  • Illinois
  • Indiana
  • Kansas
  • Kentucky
  • Maryland
  • Michigan
  • Missouri
  • Montana
  • Nebraska
  • Nevada
  • New Hampshire
  • New Jersey
  • New York
  • North Dakota
  • Oklahoma
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • Utah
  • Virginia
  • West Virginia
  • Wisconsin
  • Wyoming

Access/Print states

These states require employers to provide a written or printed pay statement that details the employee’s pay information. The pay stubs are not required to be delivered with the paycheck every month. If they use electronic pay stubs, employers must ensure their employees have the capability of printing the electronic statements.

  • California
  • Colorado
  • Connecticut
  • Iowa
  • Maine
  • Massachusetts
  • New Mexico
  • North Carolina
  • Texas
  • Vermont
  • Washington

Opt-out states

When the state adopts a specific method of delivery (such as on the paycheck or pay envelope), electronic delivery requires employee consent. If an employer in one of these states rolls out a paperless pay program to all employees, they must be allowed to opt out to begin receiving their paper pay stub once again.

  • Delaware
  • Minnesota
  • Oregon

Opt-in states

Currently, the state of Hawaii is the only state that requires employee consent prior to implementation of an electronic paperless pay system. Employers in Hawaii must provide a written or printed pay statement with details of the employee’s pay information unless the employee agrees to receive their pay statement electronically.

Ensuring Payroll Compliance

The best way to ensure country-wide compliance no matter what is to choose a payroll provider that specializes in delivering an effective and accurate service. As a provider of award-winning international payroll, FMP Global is used to navigating the complexities of multiple compliance.

When should I receive my payslip?

In accordance with payslip law, your employer must issue your payslip on or before your payday. Paydays vary by business and by pay run. Some paydays are the same day every month, while others are weekly. If you’re paid every four weeks, your payday will vary every month. You employer’s payroll team should manage this in a way that ensures that your payslips are made available to you on or before each payday.

Should my payslip be paper or electronic?

Under current payslip law, payslips can be provided in traditional hard copy or an electronic copy. In order to streamline their payroll functions and save on paper and ink, more and more people are opting for online payslips.

They also provide extra benefit to employees, because the payslips are safely stored and available at a moment’s notice. Many payroll software packages include an online payslip option as standard that meets all current payroll legislation and is able to be adapted easily to accommodate for future changes.

Can I insist on a paper payslip?

Payslip law states payslips must be provided in either hard copy or electronic copy form – employers are not obligated to produce a paper payslip if electronic ones are given. However, if you are finding accessing an electronic payslip difficult, make your employer aware, as they may be able to print them for you.

My employer refuses to give payslips – what can I do?

If you have received no payslips from your employer, your first step should be to talk to them, asking why you are not receiving your payslips. If after challenging them nothing has changed, you should speak to your local Citizens Advice Bureau for advice on the matter. You may need to raise a grievance or, worst case scenario, take your employer to a tribunal.

What should be on my payslip?

Most importantly, your payslip must show two things:

  • your earnings before and after any deductions
  • the amount of any deductions that may change each time you’re paid

Changeable deductions are typically tax and National Insurance, but they will vary based on your personal circumstances. Employers must also explain any deductions fixed in amount. You may have pension contributions, a child care subsidy or similar benefit provided by your employer. They can choose to do this either on a payslip, or in a separate written statement.

What deductions can my employer make on my payslip?

Payslip law also refers to situations where deductions are made from pay or you are required to make a payment to the employer. Employers are allowed to make deductions in cases when the deduction is:

  • required by law. Such as PAYE tax and National Insurance;
  • provided for in the contract of employment;
  • part of recovery for an overpayment of wages or expenses;
  • arises due to strike action;
  • required by a court order;
  • made with your written consent.

If you do something that results in your employer suffering a loss, they may be allowed to deduct the loss from your wages. This can include breakages, till discrepancies, or in situations where your employer is providing you with a service. This is most commonly in circumstances where your employer provides you a uniform. In these cases, a deduction or payment by the employee is only allowed within circumstances.

Under payslip law, such deductions can only be made if they are already allowed for in your contract if they are part of a service provided. For unforeseen circumstances, such as damage or breakages, payslip law states that you must have received a full week’s written notice first. Such deductions must be fair and reasonable and not exceed that cost of the loss. Deductions as a result of loss caused must take place within 6 months of said loss occurring.

Failure to pay all or part of the wages due to an employee is considered an unlawful deduction in pay and has reasonable grounds for dispute. Likewise, unpaid notice, holiday pay, bonus and commission payments can also form part of a claim under current legislation.