Pay stub, pay slip, paycheck stub. All words for the same thing. When employees receive their paychecks from you, the pay stub is what outlines the details of their pay each pay period.
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While employers are not required by federal law to provide employees with a pay stub, many states have laws that require some form of a written pay statement. And even if you’re not in a state that requires pay stubs, you’re still required by the Fair Labor Standards Act to keep track of the hours your employees work.
On a physical paycheck, a pay stub is typically attached to the same piece of paper via perforation. If you pay your employees digitally, they can access pay stubs via your online payroll system.
What information goes on a pay stub?
A pay stub typically includes the following:
- Employee information, including name, social security number, and address;
- Employer information, including name and address;
- The dates of the pay period;
- Employee pay rate;
- Gross earnings, or their earnings before taxes, employee contributions, and deductions are taken out;
- Taxes withheld, such as federal income tax, and if applicable, state or local taxes, plus the employee’s share of FICA tax;
- Employee contributions, such as to retirement plans or pensions;
- Deductions, such as for health insurance or life insurance; and
- Net pay, which is the total amount the employee actually takes home in their paycheck after all taxes, contributions, and deductions are subtracted from gross earnings.
Under gross earnings for hourly employees, it should list the hourly rate and hours worked. For salaried employees, the default is 40 hours a week.
The pay stub should also indicate overtime if the employee is eligible and any overtime hours were worked. If an employee received any bonuses, that would also appear under gross earnings. Note that some states also require additional information such as accrued sick leave to be included.
Here’s a sample electronic pay stub as well as a guide to reading a pay stub and all the details on it.
What requirements does my state have about providing pay stubs?
Federal labor law does not require you to provide paycheck stubs to your employees. However, many states have their own laws and regulations that do require you to supply them.
Let’s break down the three types of actions your state may require:
- Do you live in a state with no requirements? If you’re in a state like Alabama and Florida, which haven’t created their own rules, you don’t have to provide any kind of paycheck stub.
- Do you live in an “access state”? States like Ohio and Texas, require you to provide some type of stub, either electronic or paper
- Do you live in an “access/print” state? States like Indiana and Kansas 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-out” or “opt-in” 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
Check your state’s Department of Labor website to figure out what kind of state you live in and ensure you’re compliant with any applicable regulations.
Why should I provide a pay stub?
As the employer, a pay stub is useful for tax purposes, and it can be used to resolve any discrepancies with employee pay.
For your employee, it provides a record of their wages, helps them understand their taxes, contributions, and deductions, and allows them to ensure they were paid correctly. It can also serve as a proof of income or employment for them, which is often required when applying for a loan or form of credit.