What is a pay stub

A pay stub, also known as a pay slip or a paycheck stub, is a statement that outlines an employee’s payment details for a specific pay period.

What does a pay stub look like?

Pay stubs come in two forms:

1. If employees are paid with physical paychecks (also called paper checks), pay stubs are attached to the paychecks via perforation

2. If the employees are paid digitally, via a direct deposit to their bank account, they can access the pay stubs via the online payroll service they’ve agreed to use

What information is on a pay stub?

In the United States, pay stubs typically include these elements:

1. Employer information: Company name, address, contact information, and Employer Identification Number (EIN)

2. Employee information: Full name, address, and Taxpayer Identification Number (TIN), Social Security Number (SSN), or Individual Taxpayer Identification Number (ITIN)

3. Hourly rate: How much hourly employees are owed per one hour of work (pay stubs should also note if these rates differ during holidays)

4. Number of hours: Total hours worked during the time period on the pay stub

5. Overtime pay: How many hours of overtime they have worked, and how much they’re owed

6. Bonuses and rewards: Any additional income employees receive needs to be noted on a pay stub

7. Paid time off: The number of paid days off used by the employee, and their pay for that time period

8. Gross wages: The total, pre-tax amount of money earned before various deductions are applied, based on the employee’s pay rate

9. Tax deductions (payroll taxes): A percentage of pay that employers withhold for tax purposes (federal, state, local, Federal Insurance Contributions Act/FICA taxes, Medicare, Social Security), benefits (health insurance, life insurance, disability insurance), 401k payments, retirement plans, and wage garnishments (to pay off debts as a result of court orders/other legal action)

10. Back pay/back wages: Back pay is a “debt” owed to the employee. When they’re not paid the full amount they have earned, back pay is a way for the employer to fix their mistake

11. Net pay: This is what’s left after federal income tax, state income tax, local income taxes, and other payroll deductions and contributions are made. Pay stubs keep track of net pay for the noted pay period and for the whole year

Is a pay stub the same as a paycheck?

A pay stub and paycheck are not the same. A pay stub is a part of a paycheck that elaborates on the payment details, while a paycheck contains the actual payment owed to the employee.

What are pay stubs used for?

For employers, keeping pay stubs is recommended for tax purposes and to prevent any disputes with employees over pay discrepancies.

Employees should keep and review their pay stubs to better understand the taxes, deductions, and contributions withheld from their pay and to ensure they’re paid properly for their work. There are several cases where employees may need pay stubs:

• For housing purposes: If you want to rent or buy a home, you’ll likely need to prove your income can cover the regular required payments (mortgage or rent)

• To get a loan: For the same reason as above, you’ll need to provide pay stubs to be approved for a loan

• Employment: Some employers may request to see a candidate’s previous pay stubs during the hiring process, but this practice is widely considered unethical and exploitative. Some states (such as Massachusetts, New York, New Orleans, Philadelphia, and Pittsburgh) prohibit employers from asking to see pay stubs when hiring new employees

Are employers required to provide pay stubs?

This depends on your location. In the United States, there is no federal law that requires employers to provide their employees with pay stubs—it’s up to the state laws. States that don’t require employers to issue pay stubs include:

• Alabama

• Arkansas

• Florida

• Georgia

• Louisiana

• Mississippi

• Ohio

• South Dakota

• Tennessee

According to the Fair Labor Standards Act (FLSA), employers still need to keep payroll records for each employee for at least three years. Information used to calculate the wages (timetables, work schedules, time cards, time-tracking software information, wage deductions, and additions) should be kept for two years, as the US Department of Labor may request to inspect them.

These FLSA standards apply to employers who hire non-exempt employees and earn $500,000 per year (or more) or are engaged in interstate commerce. For the remaining states, issuing pay stubs is mandatory, but the requirements aren’t the same.

Employees are generally advised to keep paycheck stubs for one year, or until they compare them to their IRS Form W-2 and annual Social Security statement to confirm the information matches. An electronic pay statement is easier to keep, in case people feel the need to hold it longer.

Pay stub access

According to the FLSA, employers must provide employees with employment records typically noted in pay stubs. If an employer doesn’t provide pay stubs, they can provide payment information in different ways, depending on whether they’re located in an Access State or Access/Print State.

1. Access States: Employers must provide employees with some type of access to their pay stubs/payroll details. It can be a physical copy or electronic pay stub accessible via payroll software

2. Access/Print States: Employers can provide the employees with physical or electronic pay stubs, but they must be easily accessible and printable

Do you want to calculate how much hiring an employee abroad will actually cost you? Use our employment calculator to get an estimate of your overall costs for employees in different countries.