What is a pay stub?

What does a pay stub look like?

A pay stub, also known as a pay slip, paycheck stub, or check stub, is a detailed document that provides a breakdown of an employee’s earnings for a specific pay period. Typically, it includes multiple sections to display different types of information, such as employee details, earnings, deductions, and net pay. 

Pay stubs can vary in appearance depending on the employer's payroll system but generally follow a similar format that is easy to read and understand.

What information does a pay stub include?

A pay stub contains several key pieces of information that help both the employee and employer keep track of earnings, taxes, and other financial details. Here's what a typical pay stub includes:

Employee information:

• Employee name
• Employee identification number
• Social security number
• Pay period
• Pay rate: The rate at which the employee is compensated, whether it be an hourly rate for hourly employees or a salary rate for salaried workers

Earnings:

• Gross pay: The total amount of money the employee earned before any deductions, including regular earnings, overtime pay, bonuses, and any other earnings
• Number of hours worked: The total hours worked in the pay period, broken down into regular hours and overtime
• Overtime pay: Additional pay for hours worked over the standard workweek, typically calculated at a higher hourly rate
• Year-to-date (YTD) earnings: The cumulative total of gross earnings from the start of the year to the current pay period

Deductions:

• Tax withholding: Amounts withheld from gross earnings for taxes, including:
• Federal income tax
• State income tax
• Local taxes
• FICA taxes (Medicare and Social Security taxes)
• Retirement plan contributions: Amounts deducted for retirement savings plans such as 401(k) or other retirement plans
• Health insurance premiums: Deductions for the employee’s portion of health insurance costs
• Garnishments: Court-ordered deductions from earnings to pay debts such as child support or alimony
• Tax deductions: Specific amounts reduced from gross income due to qualified expenses or contributions, often related to retirement or health plans

Employer contributions:

• FICA taxes: The employer’s contribution to Social Security and Medicare, matching the employee’s contribution
• Retirement plan contributions: Any contributions made by the employer to the employee’s retirement plan

Net pay:

• Take-home pay: The amount of money the employee receives after all payroll taxes and other deductions are made, representing the actual amount deposited into their bank account or given via check
• Total amount: The final amount paid to the employee for the pay period

What are pay stubs used for?

Pay stubs serve several important purposes for both employees and employers. 

Primarily, they act as proof of income for employees, which can be required when applying for loans, renting an apartment, or for other financial verifications. Pay stubs also help identify any discrepancies between the expected and actual earnings. For example, if an employee’s earnings on their pay stub don’t match their direct deposit amount, they can raise the issue for investigation. 

For employers, particularly those in human resources, pay stubs provide a documented trail of payroll transactions that can be useful for compliance, audits, and resolving any payroll issues.

Is a pay stub the same as a paycheck?

No, a pay stub is not the same as a paycheck. 

A paycheck is the actual payment an employee receives, either as a physical check or through direct deposit. The pay stub, on the other hand, is the detailed summary that accompanies the paycheck, showing how the payment amount was calculated. It includes information on gross pay, deductions, and net pay, but does not represent the money itself, only the breakdown of how it was determined.

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Are employers required to give employees pay stubs?

Whether employers are required to provide pay stubs to their employees depends on state laws. While federal law does not mandate that business owners provide pay stubs, most states have specific requirements about what must be included on a pay stub and how it should be delivered. Some states require physical pay stubs, while others allow for electronic pay stubs as long as employees have access to them.

The states that don’t require employers to provide physical pay stubs are:

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

Pay stub access rules

Under the Fair Labor Standards Act (FLSA), there is no federal mandate requiring employers to provide pay stubs to employees. However, the FLSA does require employers to keep accurate records of hours worked and wages paid. 

When electronic pay stubs are used, employers must make sure that employees can easily access and print their pay stubs. Federal law permits the use of direct deposit and electronic statements, but it is important for employers to stay compliant with both federal and state regulations to avoid penalties.

How long should employers keep pay stubs?

Employers should keep employee pay stubs as part of their payroll records for at least four years, in compliance with IRS requirements and best practices for payroll record keeping. These records can be useful for audits, resolving discrepancies, and providing proof of payment.

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Frequently asked questions about pay stubs

Still have questions about pay stubs? Learn more in the FAQs below.

How can small businesses create pay stubs?

Small businesses can use a pay stub generator to create professional and accurate pay stubs. These tools are often user-friendly and help businesses comply with tax laws and payroll requirements, making the payroll process more efficient. Another option is payroll software, which automatically generates pay stubs whenever you run payroll.

Do independent contractors get pay stubs?

Unlike traditional employees, independent contractors typically do not receive pay stubs from employers. However, they can generate pay stubs for themselves to keep accurate records of their earnings, which can be useful for tax returns and financial tracking.

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