Pay Stubs: Legal And Other Requirements

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    Mar 2, 2023, 9:21 am2.9k ptsInsanely Great

    Starting a business often means hiring staff and handling their salaries. While most people know how to pay their employees salaries, they may need to learn about the requirements related to pay stubs. The latter is a document that indicates how the employee's salary is calculated by the company.

    Typically, companies use software or pay stubs online to generate these valuable documents. Once the pay stub is generated, it is sent to the employer's email address. This article explains pay stubs and what data these documents should contain.

    Understanding Pay Stubs

    A pay stub is a document that is different from a paycheck. The latter contains the salary after taking out all deductions, withholdings, premiums, etc. The pay stub contains valuable information companies, and their employees use for tax purposes. Moreover, pay stubs offer better trust and transparency between an employer and employee.

    Some employers prefer to hand over pay stubs with paychecks so that employees can check how their salaries are calculated. In other cases, employers prefer to directly deposit salaries to employees' bank accounts. In the latter case, employees may request access to pay stubs.

    The employer may also send a pay stub to every employer during the payday when the staff receives their salaries. The process varies from company to company. However, there are a few legal requirements that business owners must follow. Check these requirements further in the article.

    What Are The Legal Requirements?

    Federal law does not require companies to provide employees with pay stubs. However, state and local officials regulate this process. In some cases, companies operate in states where there are no requirements to pay stubs. Thus, company owners can choose whether to create these documents or skip the process.

    However, most states have this requirement. If the company works in different states, the owner must provide employees working n these regions with pay stubs. Several states require pay stubs to be supplied with each paycheck. Some just demand pay stubs if the employee requests them. Some states are particularly explicit about the information that must be included and how pay stubs must be provided, such as whether digital copies are acceptable.

    Verify your local employment laws to make sure you comply. Pay stubs are not required by law in a few areas, but employers can still offer them as a courtesy. It's a known fact that people apply for mortgages or other loan types. In this case, they may require proof of income. Pay stubs work as documents providing this proof. Thus, you may include pay stubs, so your employees feel more comfortable.

    What Should Employers Include In Pay Stubs?

    The information included may vary in different situations. However, there are a few common details. The list goes as follows:

    • General information.
    • Gross wage.
    • Deductions.
    • Employer contributions.
    • Net income.

    Let's see in detail what each section should include.

    General Information

    The general information includes who pays the salary and receives the income. Overall, the list includes the following:

    • Name and address of the employer.
    • Name and address of the employee.
    • The employee's Social Security number.
    • The date of the pay period.
    • The date when an employee receives the salary or wage.

    In some cases, a pay stub may include the employee's identification number.

    Gross Wage

    The gross wage is the figure an employee earns before taxes and other withholdings. The number indicated in the gross income section is always higher than in the net income section. Typically, the data includes the following:

    • Pay rate (hourly or salaried).
    • Working hours.
    • Overtime pay (if applicable).
    • Holiday pay (if applicable).
    • Bonuses and premiums.
    • Sick leave days.
    • Pay for vacation.

    The section ends with the calculation of the total gross income.


    The deductions section shows how much money an employer must withhold from the employee's salary. Some deductions are standard for all employees, and others may be individual. This section typically includes the following deductions:

    • Federal income tax.
    • State and local taxes.
    • Employee contribution to FICA, which includes Social Security and Medicare taxes.
    • Health and life insurance.
    • Contributions to a retirement plan.

    Each deduction is displayed within its line, totaling the current and year-to-date periods.

    Employer Contributions

    Some pay stubs include information that has no bearing on employees' net incomes, yet they need to know. The list may include the following:

    • Paid vacation and sick leave, including accumulated and used time.
    • Employer contributions to Medicare, Social Security, health and/or insurance, retirement plans, etc.

    There are no requirements that oblige employers to include this data.

    Net Income

    This section shows the employee's salary after all withholdings and deductions. For example, if the gross wage indicates that the employee earns $4,000, the real salary may be significantly lower, for example, $3,000.

    What Is A Pay Stub Online Generator?

    A pay stun online maker or generator is a simple software-based tool that requires employers to insert data and create pay stubs. The tool is typically more affordable than accounting software. The first step to start using the generator is creating an account. Once the account is ready, the employer can add all the necessary data that this article mentions. Then the tool calculates the data and creates a pay stub.

    Benefits Of Pay Stub Online Generators

    Pay stub generators are convenient tools for creating detailed documents about employees' salaries, taxes, and other withholdings. But what are the benefits for businesses to use these generators? Let's check them out!

    Looks Professional

    Pay stub online generators to have professional templates. Employers must add the required data and generate these documents. As a result, all pay stubs are in the same format. Thus, the company is more professional and put together.

    It's Quick And Easy

    Previously, companies had to fill out these pay stubs by pen. It took a lot of time and cost. Today, the process is fast and easy, thanks to these generators.

    Reduces Human Error

    An employer chooses a template and fills out empty fields with the required information. This process is automated and reduces human error.

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