Why Should You Go Paperless With Digital Pay Stubs?

The nature of processing payroll has changed over the last few years. As expected, the corporate world continues to adopt digital solutions in its operations. There have been new innovations in the way employees receive their pay details.

Digital pay stubs are gradually replacing paper pay stubs. And it’s a sound business move that would decrease costs and satisfy human resources.

In this article, we’ll talk about what digital pay stubs are and whether they might be legal or not. You’ll also learn the tangible benefits they offer to both employers and employees.

What Are Digital Pay Stubs?

Electronic pay stubs are digital documents that are similar to standard paper pay stubs. They display all the relevant information an employee would wish to know regarding their pay. The main data on paper stubs is also provided in electronic format. It includes the personal information of employees, their income, deductions, and net pay.

There is just one clear difference between them, and that’s the manner of providing information. Employees no longer get a hard copy of a pay stub. Instead, they receive PDF or other format through websites, email, or payroll software. They can view, download, or print them to get the hard copy. Most times, the system has passwords that are crucial to safeguarding an employee’s financial data.

Benefits of Paperless Payroll for Employers

Switching to digital pay stubs offers more advantages than just saving money. These electronic documents help employers in many ways. That includes improving how the organization runs and ensuring compliance with laws. This will enhance relationships between employers and employees.

One of the biggest benefits of digital payroll systems is that they lead to greater accuracy. Most digital payroll systems have built-in safety checks that catch errors before payday. This means there are fewer mistakes to fix later. This not only saves time. It also reduces the hassle of correcting payroll errors.

Keeping records is much easier with electronic systems. These systems can securely store all necessary records. This helps them meet legal and contractual requirements without taking up physical space. They can be shared electronically when needed for audits, legal reasons, or employee inquiries. Some systems even automatically keep records for the required amount of time. And it does not need any input.

Another benefit of digital payroll is the added security features. Traditional paper paychecks can be lost or stolen. They can also be accessed by someone who shouldn’t have access. Digital systems use encryption, passwords, and access controls. This greatly reduces the chances of unauthorized access to payroll information.

Multi-state employers need to keep other factors in mind. Online pay stub systems can be set up to adhere to the different rules of every state. In this case, updates can be made without redesigning and reprinting the paper documents.

It will be much faster and require less time for the payroll and HR staff. Another empowering factor is digital distribution. There is no longer any need to print or envelope stubs. You no longer have to personally deliver them to the recipients. All these time savings accrue to increased efficiency. And you can allocate time for more valuable exercises.

Advantages of Electronic Pay Stubs for Employees

From the employee’s standpoint, the use of online pay stubs is beneficial.

A factor considered to be most valuable is the easy access. As soon as it gets to the stage of processing payrolls, employees are able to check the details of their pay. They don’t need to wait for them to be delivered through physical means. Such accessibility is not limited to the workplace. The employees can check their pay details at home or when traveling. The place just needs an internet connection.

Employees require pay stubs for some financial situations. Examples are when applying for a loan, buying a house, and other necessities. They mostly require an individual to show proof of income. The digitally generated pay stub can come in handy. They can easily transmit the necessary data by emailing it or printing it.

Digital payroll also helps keep historical information. Almost all companies keep their employees' pay history for several years. So they can easily keep track of their pay history and check deduction alterations. They can also check tax numbers without keeping bulky files.

A majority of electronic pay stubs offer other financial management features. These may include earnings historical charts or explanations of where the amount is spent. They may also have tools to track benefits or retirement contributions. Many also have tools that will enable employees to make good predictions. For example, what would a change in their withholding or benefits choices be like?

Legal Considerations and Compliance

As can be seen, there are many benefits of using online pay stubs. Nevertheless, employers have to meet certain legal requirements when adopting paperless payroll:

On the federal level, the FLSA only necessitates the keeping of records for hours worked and wages paid. It does not explicitly compel employers to provide pay stubs to the employees. Nonetheless, the Internal Revenue Service (IRS) and the Department of Labor have record-keeping formalities. These demand effective payroll data management.

State requirements vary significantly. Some states have no law up to date regarding this matter. Other states have specific legal requirements regarding which details may be provided on pay stubs. Some of the most detailed requirements are in states like California, New York, and Illinois.

Generally, state laws are grouped under several categories:

• Access States: They require employers to give pay stubs to their employees. There are no format requirements.

• Access/Print States: Here, employees must have open access to the print version of their stubs. So, if the company is using online pay stubs, they should be able to print it easily.

• Opt-In States: Employees must opt-in to receive their pay stubs in electronic format.

• Opt-Out States: These allow the employer to offer electronic pay stubs to the employees. Employees can then demand a paper copy instead.

It is important to consult legislation in all the states in which the employer is located. This helps make sure that the pay stubs generated meet the highest standards. 

To Sum It Up

Digital pay stubs are convenient and are an improvement from the previous payroll methods. It is possible to note several benefits of using electronic pay documentation. Employers who have not yet incorporated technological changes should consider digital payroll. It will be a good step in improving their existing system of issuing pay stubs.

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