Pay Stub Law 2021
Understanding pay stubs with IRIS FMP
Pay stubs, or paycheck stubs, are written statements documenting details of the employee’s wages during a set pay period or schedule. An employer’s obligations surrounding pay stubs will differ from state to state. That means ensuring that you are compliant can seem complicated, but as international payroll specialists we are here to guide you through the pay stub laws for 2021.
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 pay stub requirements by 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 record-keeping 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.
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.
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:
- Employee’s full name and social security number
- Address, including zip code
- Birth date, if younger than 19
- Sex and occupation
- Time and day of week when employee’s workweek begins
- Hours worked each day
- Total hours worked each workweek
- Basis on which employee’s wages are paid (e.g., “$9 per hour”, “$440 a week”, “piecework”)
- Regular hourly pay rate
- Total daily or weekly straight-time earnings
- Total overtime earnings for the workweek
- All additions to or deductions from the employee’s wages
- Total wages paid each pay period
- Date of payment and the pay period covered by the payment
State Pay Stub Laws
While there is no federal law pertaining to providing pay stubs, most states have their own laws requiring employers to provide access to them. 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.
To determine your state’s pay stub legislation, 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. They must adhere to the previous method if an employee prefers it.
- In opt-in states, employers must offer paper stubs unless an employee chooses to get the stub electronically
What information is required 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. However, here’s an example of what a paycheck stub in Pennsylvania must include, according to PA Admin Code 34:231.36:
- Hours worked
- Rates paid
- Gross wages
- Allowances (if any) claimed as part of the minimum wage
- 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 and costs of 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.
Pay Stub Requirements by State – 2021
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 stub in an electronic format, but they don’t have to.
- South Dakota
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.
- New Hampshire
- New Jersey
- New York
- North Dakota
- Rhode Island
- South Carolina
- West Virginia
As of 1st January 2021, law SB2328 enables employees in New York to opt for an electronic confirmation in lieu of paper pay stubs.
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.
- New Mexico
- North Carolina
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.
Currently, the state of Hawaii is the only state that requires employee consent prior to the 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.
Learn more about payroll in the US.
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, IRIS FMP is used to navigating the complexities of multiple compliance.
When should I receive my pay stub?
In the US, Federal law does not require employers to pay between specific intervals (for instance, weekly, bi-weekly or monthly), however, state laws might. The Fair Labor Standards Act says that employers must pay their workers “promptly.” Though unspecific, it is generally understood that pay should be received as soon after the most recent pay period as possible.
Should my pay stub be paper or electronic?
This depends on the state where the employment is based. As presented above, if you are in one of the eleven states that require employers to provide printed statements, then your pay stub will be delivered in printed form. It most of these ‘Printed’ states, employers are allowed to provide these electronically, as long as they are printable.
If in one of the ‘Access’ states, employers must provide employees with access to a pay statement, however, this does not need to be printed. And finally, if you are in a ‘No Requirement’ state, then employers are not required to give you a pay stub at all.
What deductions can employers make on pay stubs?
Your employer will withhold a certain amount from your pay for taxes and items dictated by FICA, such as Federal Income tax and Social Security contributions. Employers can make deductions from your pay stub that are either:
- legally authorized
- voluntarily authorized by the employee for themselves
Legally authorized payments include things like meals, housing, transportation, debts owed to the employer, child support and alimony. Voluntarily authorized deductions can be things like charitable contributions or insurance and can be made even if the employee’s pay falls below minimum wage after deduction.
Employers cannot deduct items that could be considered to be of benefit or convenience to the employer. They also cannot deny or adjust compensation retroactively as punishment for poor performance.
Can I insist on a paper pay stub?
If you are located in a ‘Printed / Access’ state and are not able to print your electronic statement, then yes – you should be able to request this.
My employer refuses to give pay stubs – what can I do?
If an employer refuses to give an employee a pay stub, then the employee may be able to sue in a court of law to obtain the requested records.
“While FLSA does not require the pay stub statement, most states require that the information be available to the employee, but not necessarily as a paper paystub,” Attorney Eric D. Anderson of Eric D. Anderson Law, Ltd.
What information is included on a pay stub?
A pay stub typically includes:
- Employee information – name, social security number, address
- Dates for the pay period
- Employee’s pay rate
- Gross earnings before deductions
- Taxes withheld, e.g. federal income tax
- Employee contributions, e.g. pensions contributions
- Deductions, e.g. for insurance
- Net pay (the total amount an employee takes home after taxes, contributions and deductions are removed)
To find out more, read our guide to understanding your pay stub.