The Complete Guide to Pay Stub Requirements by State
June 30, 2023
We have different pay stub requirements by state for one crucial reason: to provide ample protection for salaried employees and wage-earners against any unjust practices in the workplace.
Unjust practices may include not receiving the proper compensation for their job, unfulfilled employer tax obligations, and failing to grant employees access to their paycheck records.
Noncompliance with laws governing pay stub requirements merits serious consequences. Therefore, this article will guide you on the dos and don’ts of preparing pay stubs for your employees so you avoid any unnecessary headaches.
- A pay stub is a document employers issue to inform employees of their gross and net wages, deductions, and completed work hours.
- The FLSA does not require employers to issue pay stubs. However, there are pay stub requirements per state that require businesses to store paycheck records and make the documents accessible to their workers.
- Failure to comply with existing federal, state, or local pay stub laws may lead to penalty fees, an audit from the DOL or IRS, damaged reputation, or closure of business.
What is a Pay Stub?
A pay stub, also called a pay record, wage statement, or paycheck, is a document that itemizes employees’ hourly rates, gross wages, withholding taxes and other deductions, and net earnings. Employers follow a set pay date when issuing pay stubs.
The payroll cycle determines the pay date and the number of working days covered in each period. For instance, if a company follows a bi-weekly payroll cycle, employees are paid twice a month or 80 work hours for every completed pay period.
Salaried employees and wage earners are both entitled to receive pay stubs. In response, employers can issue a paper-based or electronic pay stub. Companies that provide electronic pay records use an HR or employee portal.
Presently, electronic pay stubs are preferred by employers and employees because they are more convenient and practical. Still, it is necessary to abide by pay stub requirements by state to assess whether keeping paper-based, electronic, or both types of paychecks is mandatory.
The Importance of Pay Stubs
Pay stubs are integral to employers, employees, freelancers, and independent contractors.
Pay stubs contain information such as payroll taxes, salaries and wages, bonuses, and paid employee time off, which employers use in calculating their accrued payroll. The resulting values in a company’s accrued payroll help employers assess their expenses and budget for the succeeding months.
Employees, freelancers, and independent contractors use their pay records when filing their taxes and checking whether they qualify for tax returns. They also need pay stubs when applying for loans or renting apartments. Paychecks are valid proof of income, affirming an individual’s ability to pay rent or repay loans.
Given that pay records serve different purposes for working individuals and businesses, the pay stub requirements by state are established to adhere to the needs and rights of employees specific to their work location.
Are Employers Required to Issue Pay Stubs?
In truth, employers are not federally obligated to issue pay stubs to their employees. Employers are given the freedom to assess and decide whether preparing and disbursing pay stubs would benefit their employees.
It is also important to note that the requirements for issuing pay stubs may differ by state. Some states oblige employers to provide wage statements. Other state laws specify whether companies should provide paper-based or paperless paycheck records.
Employers are not mandated by federal law to provide pay stubs to their staff. However, they must check with the state and local authorities for specific payroll management regulations.
Federal Payroll Law
The Fair Labor Standards Act (FLSA) was passed in 1938 to protect salaried and hourly workers against unlawful or unfair labor practices.
Among the primary focuses of the FLSA are distinguishing when employees are working “on the clock” and when they are entitled to overtime compensation. The law also covers the minimum wage and the recordkeeping of essential employment documents, including pay stubs.
The FLSA does not require employers, particularly privately owned companies, to send or issue employee pay stubs. Instead, it mandates that employers store payroll records. In line with that, companies must have an organized and well-defined system for providing employees with all the essential information on their salaries and wages.
The accessibility of employee information varies, which is one of the key stipulations in the different pay stub requirements by state.
Pay Stub Requirements by State
Let’s discuss the different pay stub requirements by state one by one:
States With No Pay Stub Requirements
There are nine states in total that do not impose any pay stub requirements, namely:
- South Dakota
In these states, companies or employers are not obligated to provide their staff with a statement or document that details their earnings. Employers who create paycheck stubs are free to issue electronic copies of the said payroll document.
Access states refer to states where employers are legally required to make their employees' wage statements or pay stubs available. The pay stubs must contain the complete details of an employee’s pay information, regardless of whether the employer sends them in print or electronic format.
The 26 states below are the so-called ‘access states’:
- New Hampshire
- New Jersey
- New York
- North Dakota
- Rhode Island
- South Carolina
- West Virginia
The states that follow the access/print rule are:
- New Mexico
- North Carolina
If access states obligate employers to provide pay stubs with no particular conditions on the paycheck’s format, access/print states are different. The pay stub requirements by state in this category specify the need for companies to issue paper-based paychecks.
Physical copies of employees’ pay stubs can be written or printed. Alternatively, electronic pay records are still allowed in access/print states as long as employees have easy access to print or reproduce a physical copy of their pay stub.
Hawaii is the only state that requires the consent or approval of employees to have their pay stubs sent to them electronically. Otherwise, employers are legally instructed to provide physical copies (printed or written) of their employee’s wage statements.
Opt-out states follow both electronic and paper pay stub requirements. These states allow employees to be exempt from receiving electronic pay stubs or any other method or format of issuing pay stubs implemented by their employer.
These states are:
The table below summarizes the different pay stub requirements by state:
Delaware, Minnesota, Oregon
No Paystub Requirements
Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Ohio, South Dakota, Tennessee
California, Colorado, Connecticut, Iowa, Maine, Massachusetts, New Mexico, North Carolina, Texas, Vermont, Washington
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
What Deductions Can Employers Make on Pay Stubs?
Pay records enumerate all the essential information coupled with an employee’s hard-earned wage or salary. Deductions applied to the gross earnings of employees are one of the most crucial details that must be reflected on a worker’s pay stub.
These deductions comprise mandatory and voluntary deductions.
Mandatory deductions include:
- FICA (Federal Insurance Contributions Act), which provides for Social
- Security and Medicare taxes
- Federal income tax
- State and local income taxes
- Wage garnishments.
Voluntary deductions are deducted from employee salaries with their consent and are used to cover benefits that employees have chosen to partake in.
Voluntary deductions include:
- Insurance plans
- Retirement plans
- Health insurance premiums
What Are the Penalties For Not Complying with Pay Stub Laws?
The penalties for not complying with pay stub laws may vary depending on the different pay stub requirements by state.
In California, businesses have to pay fines that range from $50 (for first-time violations) to $100 for every offense committed per employee pay stub each pay period.
Department of Labor (DOL) or Internal Revenue Services (IRS) Audit
The Department of Labor may conduct an audit if it discovers that a company is failing to provide employees with their paycheck records, especially in a locale or state where access to pay stubs is mandatory.
Paychecks also contain information on an employee’s withholding taxes. Suppose the IRS notices discrepancies in an employee's or employer’s taxes. In that case, they may request that employers provide copies of their employees' pay stubs or other information to verify that the company's or worker’s tax obligations are fulfilled.
Failing to comply with pay stub requirements indicates a blatant disregard for employees’ fundamental rights. Employees can report or sue an employer that’s notorious for not giving paystubs.
Closure of Business
Employers who have committed extreme or successive pay stub law violations may face the immediate closure of their business.
5 Best Practices to Consider When Generating Pay Stubs
Here are some helpful tips to ensure complete compliance with pay stub requirements by state at all times:
- Provide complete and accurate employee information. See that you fill out each employee’s pay stub with the necessary information, such as their hourly rates, gross and net earnings, and the amount withheld from their salaries for taxes and voluntary deductions.
- Use pay stub templates with a clean and simple design. Ideally, employees should be able to see their earnings and deductions for a completed pay period at first glance.
- Confide with your employees. Ask your employees whether they prefer electronic or physical copies of their pay stubs. Make sure that you have an employee portal in place in case some employees choose to receive paperless pay records.
- Check with state and local authorities. Take the time to review the existing pay stub laws in your area to make sure you understand the regulations.
- Use a paystub generator. A paystub generator saves time, energy, and money. For instance, our paystub generator comes with a calculator to help you yield more accurate values for your employees’ earnings and salary adjustments.
Pay stubs are more than just a piece of paper or a table filled with numbers and decimals. It represents the hours of hard work each employee dedicates to the company. Pay records also provide workers with solid proof of income and compliance with their tax responsibilities.
That said, all employers must follow all pay stub requirements by state and uphold their employees’ rights to access their paycheck records and receive proper compensation for their work.
Pay Stub Requirements by State FAQ
#1. Are pay stubs required by law in NY?
New York state law mandates that employers provide pay stubs to their employees every payday. The right of an employee to receive pay stubs must be documented in their employment contract.
#2. What is the law on paystubs in Texas?
In Texas, all employees are entitled to receive pay stubs bearing complete information on their rates, number of work hours rendered, and deductions, as well as their total gross and net earnings.
#3. My employer won’t give me paystubs. What can I do?
File a complaint or a lawsuit if your employer refuses to let you access your paycheck records. This is especially true if you work in a state where issuing pay stubs is required.
#4. What information goes on a pay stub?
A pay stub contains the employer's and employee’s names, contact details, and address. It also enumerates an employee's pay rate, gross earnings, deductions, net earnings, and other salary adjustments.
#5. How do I show proof of income if I get paid in cash?
You can use tax documents, proof of income letters, and employment contracts if you are paid in cash. Freelancers and independent contractors can use a paystub generator to create earnings statements for every project or client.