What You Should Know About State Pay Stub Laws

Usually, every employee gets their pay along with a pay stub that breaks it down. These pay stubs are relatively basic documents governed by different state laws. While some states are fully open about allowing electronic delivery, others are not. While some specify the information that should be given, others don’t.

For employers who have employees in many states, this knowledge is important. It ensures that they do not fall foul of the law and compromise the trust of the employees. 

This article explains state pay stub laws to help ensure payroll compliance in your business.

Why Are Pay Stubs Important?

A pay stub is also called a check stub, paycheck stub, or pay voucher. It is a document that indicates the breakdown of what an employee has been paid. Pay stubs have other functions besides showing the employee how much they have earned.

Pay stubs are important since they assist employers in managing payroll overhead costs. They are also useful for calculating total payroll and tax computation. 

For the employees, these documents offer some clarity concerning their remuneration. It assists with the creation of the budgets. They can also use it as proof of income when acquiring loans, renting houses, or applying for entitlements.

Pay stubs, in their essence, play a crucial role in establishing legal evidence for remuneration issues. That’s if any arise between employers and employees. Both parties cannot easily come up with false claims.

Federal Wage Laws on Pay Stubs

Surprisingly, virtually no federal law compels employers to give their employees access to pay stubs. Many employees think that there is such a rule. Currently, the FLSA provides the rules that pertain to, among other things, minimum wage. It also has regulations on overtime and record-keeping. However, it does not mandate that employers provide pay stubs.

The FLSA mandates keeping records of employees’ wages and hours worked, as well as other information. These records have to be retained and produced to the Department of Labor as and when required. This record-keeping means that mechanisms must be employed in the compensation documentation.

Since federal law does not prescribe mandatory elements of pay stubs, it is up to the states to determine the same. Therefore, the laws are not standardized across the 50 states. This is because certain aspects of operations might differ from one state to another. This situation poses a big challenge to companies regarding compliance with these rules.

Categories of State Pay Stub Laws

There are different categories of state pay stub laws:

Access States

These states require employers to give employees access to information on their wages in some way. It does not specify the format that the disclosure has to follow. As for the delivery method, it is suitable to do it electronically. 

However, the employees must be able to find this information easily. It might, therefore, entail offering a secure website. Here, users can log in to view and download their pay details. The above-discussed 26 states are as follows:

• 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​

• Wyoming

Access/Print States

Some states make it mandatory for employers to give employees access to printed statements. This also means that an employer may opt to provide the pay stubs electronically. However, they must ensure that the employees have access to printed copies. There must be other means by which they shall be able to get a hard copy of their pay details. Eleven states are in the access/print group, and they include:

• California

• ​Colorado

• ​Connecticut

• ​Iowa​

• Maine

• ​Massachusetts​

• New Mexico

• ​North Carolina

• Texas

• ​Vermont​

• Washington

Opt-Out States

These are states which provide employers the freedom to adopt e-pay stub systems. At the same time, they give employees a chance to opt for paper pay stubs if they desire so. These requirements focus on the employee’s choice. It takes into account that some workers may not be comfortable with electronic systems. The states are:

• Delaware 

• Minnesota

• Oregon

Opt-In States

These are the states in which an employer is compelled to obtain written consent from the employees first. Then, they can provide them with electronic pay stubs. However, if such consent is not given, then the physical pay stubs must be provided. Hawaii is the only state in this category.

No Requirement States

These are the states that have no legal provision that requires employers to give pay stubs to their employees. In these states, employers have full autonomy over the matter. They can determine when and how they will relay the pay information to employees.

However, even in these states, most employers find it suitable to provide pay stubs as a measure of best practice. Additionally, presenting pay stubs helps employers demonstrate conformity with other legal provisions. These include minimum wage and overtime wage laws.

There are nine states here, and they are:

• Alabama

• ​Arkansas

• ​Florida

• Georgia

• ​Louisiana

• ​Mississippi

• Ohio​

• South Dakota​

• Tennessee

Key Information To Include on Pay Stubs

There are some basic components of pay stubs to give an employee a clear view of their earnings:

• Personal details: Name of the employee, their place of residence, and identification number of the employee.  

• Employer details: Company name, company address, and employer identification number.  

• Employment information: Information relevant to the pay period, such as the date range for the period covered.  

• Gross wages: Total earnings before deductions.  

• Deductions: These include compulsory deductions and voluntary ones.  

• Net pay: The final amount paid to the employee after subtracting all deductions.

As mentioned earlier, some states have additional mandates that must be met when preparing pay stubs. For instance, in California, employers must include the employee’s earned paid sick days or paid time off. Some other states may also require the employer’s unemployment insurance (UI) account number.

Penalties for Non-Compliance With State Pay Stub Laws

There are different penalties associated with failure to adhere to state pay stub laws:

Financial Penalties

Fines are the most common penalty. For instance, first-time violators in California risk incurring a penalty of $50. Continuous offenders risk a penalty of $100 per employee for violation of each pay period. There’s a maximum of $4,000 per employee. Such penalties may accrue significantly, especially for frequent offenders. In other states, it may differ, but such fees may still be very high.

Audits

Non-compliance can lead to audits from the Department of Labor (DOL) or the Internal Revenue Service (IRS). They can request employers to present the stubs and other payroll records to reveal them. These audits can indeed be very tiresome and complicated. Often, they reveal other areas that could attract additional penalties.

Lawsuits

Employees who do not receive the required pay stubs may file lawsuits against the employers. These lawsuits may lead to fines and penalties as specified in the litigation. Legal fees, other costs related to the case, and compensations for the concerned employees also add up. Even if an employer wins such a lawsuit, they still face substantial legal expenses.

Reputational Damage

Reputational loss is perhaps less tangible but actually more dangerous. It may damage the image of the employer. As a result, it may be challenging to attract intelligent and skilled personnel to work for the company. 

Business Closure

If certain or severe cases of violation of the pay stub or other labor laws occur, this may result in a business shutdown. This could be due to excessive fines and penalties and legal liabilities. It could also result from the inability to operate due to a tarnished image or the loss of clientele and employees. 

Final Comments

State pay stub laws can be complex, especially for businesses operating across multiple states. Stay informed about the specific requirements in your state. Make sure you implement robust payroll processes. This way, you can ensure payroll compliance. At the same, you provide employees with the transparency they deserve. When in doubt, consult with a payroll professional or legal advisor.

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