Taking care of your employees is the best way to get on the road to success even if you are running a small business. But there’s a lot that goes into that. Arguably, one of the most important decisions you will make with regards to your employees is how you are going to manage and handle the payroll process.
Pretty much 100% of employees would like to receive their pay through direct deposit, but there are many small businesses which still choose to use paper checks for their payroll. If you’re running a business and want to learn more about how to make pay stubs for your employees and what rules should be followed, then read on. Before choosing how to go about paying your employees, ensure that you’re compliant with state regulations, there are some requirements which vary by state which need to be followed related to the delivery of employee pay information.
Federal Law Overview
According to The Fair Labor Standard Act (FLSA), payroll records should be kept by the employer, but it does not require employers to provide pay stubs to employees. Employers don’t have to provide a paper record, but Federal laws do have strict requirements for record keeping.
State Law Overview
Despite of the fact that pay statements are not required under Federal law, most states have preferred to pass laws that require employers to provide regular statements about their pay and withholding. Your state might not require employer-issued pay stubs, but an employee has the right to call for payroll records.
For instance, printed pay stubs are mandatory in Colorado, Arizona, Connecticut, Iowa, Hawaii, Maine, Minnesota, North Carolina, New Mexico, Vermont, and Texas. However, most of the states allow employers to use electronic pay stubs as long as these three standards are met:
-Employees have a unique, secure login
-Employees can access the pay stub electronically
-The pay stubs can be printed out
There are several states where employers are not required to provide pay stubs at all: Arkansas, Florida, Louisiana, Mississippi, Nebraska, South Dakota, Tennessee and Virginia.
Access/Print
Some states require businesses to provide a printed pay statement for all employees, though this generally means that employees must be able to access their pay stubs electronically and be able to print them easily. The states in this group include California, Colorado, Connecticut, Iowa, Maine, Massachusetts, New Mexico, North Carolina, Texas, Vermont, and Washington.
Opt-out
Employees in states with opt-out rules must consent to specific methods of checkstub delivery. For example, if a company has introduced a new paperless program, employees must be allowed to ‘opt-out’ and keep receiving their paper stubs instead. States in this group include Delaware, Minnesota and Oregon.
Opt-In
Companies or businesses in Hawaii must offer printed or written pay statements unless the employee agrees to receive his or her pay statement electronically. Hawaii is the only state to require this type of consent.
Generally, these items below are required on paycheck statements:
- Employee name
- Social Security Number
- Pay Rate
- Pay Period
- Deductions
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