Around four in ten businesses will pay $845 in payroll penalties to the IRS this year. This usually happens when someone isn’t following the rules around conducting payroll. You may wonder what payroll laws say about how your employer collects taxes or issues pay stubs. If you have questions, check out these ten facts.
1. State Laws Can Mandate Pay Stubs
First, there is no single rule about employers needing to give an employee a payment stub. Federal law doesn’t require it. That doesn’t always mean employers have no obligation to issue a pay stub. In fact, many states have laws on the books about payroll records. In states like California, Maine, and Texas, your employer must give you a pay stub in a written or printed format.
Generally, your employer must provide you with one. Only a handful of states, including Georgia and Ohio, allow employers not to issue pay stubs.
2. The Fair Labor Standards Act Requires Records
Even in Georgia and Ohio, it’s still a good idea for employers to provide a payroll stub. Why? There’s no federal law saying an employee must get a pay stub. The Fair Labor Standards Act does have rules on record-keeping though. FLSA doesn’t necessarily give employees the right to request their records. Most experts suggest it’s good practice to enable access, especially if an employee requests it.
This includes even the states where employers aren’t required to issue pay stubs in any format.
3. Payroll Laws Impose Penalties On Employers
What happens if your employer doesn’t provide a pay stub for you? It does depend on state regulations. If you’re in Alabama, which is a no-stub state, you may have a harder time accessing records. In a state like Maryland or New York, your employer is required to provide access. New York law imposes a $250 fine on employers who don’t provide a pay stub. The fine is levied any time a pay stub isn’t issued, up to $5,000.
4. Rules About Wages And Deductions
One of the reasons you want access to a pay stub is to have a record of your earnings and deductions. You’ll need this information to file your taxes with the IRS. If you don’t have access to this information, you may end up filing incorrectly and paying penalties. Another reason to access payroll records is to ensure accuracy. Payroll specialists do sometimes make mistakes.
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Some small business owners do payroll themselves, and they may not always get it right. You want to be sure you’re being paid the correct wages. The Department of Labor, Wage, and Hour Division set rules on minimum wage, overtime pay requirements, and more. They also have laws about the minimum number of paydays. Deductions and exemptions are also outlined by the Department.
If you have access to records, you can verify your employer is complying with all these rules.
5. There Are Several Federal Taxes
Deductions and withholdings are a key aspect of conducting payroll. Your employer will need to withhold income tax. They’ll also make deductions for:
- Social Security
A pay stub records information about what’s been withheld for you. You can use this information to ensure you’re not over- or underpaying. This can help you avoid penalties on your own tax filings.
6. Laws Mandate When You Receive Records
In states where employers must supply records, there are usually rules about when you need to receive the records. Most states require employers to provide a pay stub on or before payday. If your employer doesn’t provide a payslip on payday, you can request it. State laws vary on how long an employer has to produce a pay stub once it’s been requested.
California, for example, gives employers 21 days to supply a record once it’s been requested.
7. Acceptable Formats For Payroll Check Stubs
The majority of states have rules that require employers to provide pay stubs. Of these, 26 don’t specify how employers need to supply a stub. In these states, it’s assumed that a pay stub can be supplied in a printed format or as an electronic version. Some states allow employees to opt-out of electronic programs. These are:
Only one state requires employees to opt-in. In Hawai’i, you must give your employer permission to issue an electronic pay stub. If you don’t, then your pay stub must be printed.
8. What Needs To Be Recorded
The FLSA outlines what needs to be included in payroll records. This includes employee information, such as your name and occupation. The pay stub must also include your regular hourly pay rate, your earnings, and any overtime earnings for the pay period. There must also be a sign of when the pay period began and the basis on which your wages are paid.
Deductions will also be recorded, as well as the total wages paid. The date of payment and the pay period covered is also required. If your pay stub lacks any of this information, you should take it up with your employer. They may be in non-compliance with FLSA record-keeping standards.
9. States Taxes Must Also Be Paid
Besides the federal taxes and deductions, there are also state taxes. These include income tax, unemployment, and disability. You are subject to these deductions but they do vary from state to state.
10. The Rules Might Be Changing
The Department of Labor recently announced a rule to clarify employer responsibilities. While the proposed rule didn’t affect the employee pay stub directly, it did address joint employment situations. The aim was to clarify that the correct wages were paid to employees by the right party. This demonstrates that the payroll laws can and do change from time to time. You and your employer should keep an eye on rule changes.
Get Better Records And Peace Of Mind
Now you know all about payroll laws about pay stubs and record keeping. Maintaining good records is a smart idea for both you and your employer. If you need to create a pay stub hassle-free you can do so in minutes, download or print it. Check out what all the rave is about!