Paystub: The Complete Employer Guide
What a pay stub is, what goes on it, and the state laws that decide whether you must issue one. Federal law does not require pay stubs. Your state might.
Paystub
What goes on it, who is legally required to issue one, why your payroll provider will not save you, and how to read every line of it
Search for anything about pay stubs and you will find two kinds of page. One is a glossary entry from a payroll giant that defines the term in nine hundred words and then invites you to try their software. The other is a tool that will generate a pay stub for you in thirty seconds, aimed at a freelancer who needs to prove income to a landlord.
Neither of those is written for you, the person who has to issue the things. And neither will tell you the fact that actually matters, which is this: federal law does not require you to give an employee a pay stub at all.
That is not a loophole and it is not an invitation to stop. It is the starting point for understanding the entire subject, because it means the rules that bind you are state rules, they vary enormously, and there are five distinct regimes with different requirements. It means an employer who went paperless without checking may be breaking the law in one state while being completely fine in another. And it means the most expensive mistakes here are not about paying people the wrong amount. They are about paying people the right amount and documenting it wrong.
So this guide covers the whole thing from the employer's side: what a stub is, what goes on it, what every abbreviation means, the state regimes, why California can cost you thousands for a stub that is missing an address, why your payroll provider cannot take that liability off your hands, how long you have to keep them, and what to do when someone asks for one to get a mortgage. It is written for a US business with five to fifty people and no HR department. FirstHR does not run your payroll; your provider does. What I build is the records layer that keeps the stubs, holds the consents, and still has both of them in three years. This is general information rather than legal advice, and pay stub law is unusually state-specific, so verify before you act.
What a Pay Stub Is
A pay stub is the document that explains a paycheck. It shows what the employee earned, what came out, and what was left, and it is the only document that lets them check your arithmetic.
The name is a fossil. There was a time when you received a physical check and the stub was the part you tore off and kept, and the terminology has outlived the object by a couple of decades. Today almost everyone is paid by direct deposit, the money arrives invisibly, and the stub survives as a standalone document explaining a payment nobody watched happen. It is one of the quieter parts of HR operations, and one of the most consequential.
Pay stub, wage statement, earnings statement, paystub
All the same thing. Wage statement is the term the law tends to use, particularly in state statutes. Earnings statement shows up in some payroll systems. Payroll check stub is the older phrasing, from when there was a check. And paystub as one word is simply what people type.
Worth knowing because when you go looking up your state's requirements, the statute will almost certainly say wage statement or itemized statement, not pay stub, and searching for the wrong term will make you think your state has no law when it does.
The stub is not the paycheck
Obvious, and yet it is the source of a persistent confusion. The paycheck is the money. The stub is the explanation. The stub shows a pay period, meaning the range of dates worked, and it arrives on a pay date, which is a different date, later, because you pay in arrears.
An employee looking at a stub dated the 23rd covering work from the 5th to the 18th is not looking at an error. They are looking at the gap that is inherent in paying for completed work, printed on a document, and it is worth explaining that once rather than answering it every quarter.
Federal Law Does Not Require Pay Stubs
This is the fact the entire subject rests on and almost nobody leads with it. The FLSA does not require you to give anyone a pay stub.
What the FLSA does require is recordkeeping, and it is specific about what. Under 29 CFR Part 516, every covered employer must maintain, for each nonexempt worker, their identifying information, the hours worked each day and each week, the basis on which wages are paid, the regular hourly rate, total straight-time and overtime earnings, all additions and deductions, total wages paid each period, and the date of payment and pay period covered.
Look at that list. It is, almost exactly, the contents of a pay stub. Which produces the practical conclusion that matters more than the technical one: the federal government requires you to compile all the information on a pay stub, and merely declines to require you to hand it over. Given that you have to produce the data anyway, not issuing the stub is a choice to withhold something you have already made.
So why does everyone think it is required?
Because it effectively is, for most employers, just not federally. Most states require it. Most payroll systems produce one automatically. Most employees expect one. And most owners never encounter the underlying rule because they never had to.
The reason to know it is not a trivia point. It is that if the requirement is state, then the requirement is different in every state you employ someone, and the moment you hire your first remote person across a state line, you have inherited a second rulebook you did not read. That is a recurring pattern across employment law, and pay stubs are one of its clearest examples.
The Five State Regimes
Every state falls into one of five categories, and knowing which one you are in tells you almost everything you need to know about your obligations.
Two of those regimes deserve to be pulled out, because they are the ones that cause actual violations rather than theoretical ones.
Access and print is not the same as access
An access state is satisfied by an employee being able to see their stub. An access and print state requires that they can also print it. Those sound like the same thing and they are not.
A portal that displays a stub as an image, or in a viewer with printing disabled, or behind a login that a former employee no longer has, may satisfy access and fail print. And an employee who cannot print their stub cannot give it to a landlord or a mortgage broker, which is what stubs are mostly used for outside your walls. This is one of the practical arguments for a proper employee self-service portal rather than an email attachment.
Opt in is the one that catches people going paperless
Here is the failure mode, and it is common. An owner decides to go paperless. They flip everyone to electronic stubs. Nobody objects, because nobody minds. And in an opt-in state, they have just violated the law, because in an opt-in state paper is the default and electronic requires the employee's affirmative written consent before the switch.
Hawaii is the state that does this. Per the Hawaii Wage Standards Division, the employer must furnish a printed statement unless the employee has given written authorization for electronic delivery. Not implied consent. Not silence. Written authorization, obtained beforehand.
What Goes on a Pay Stub
The full inventory. Not every item is legally required everywhere, but every item is worth having, because the test of a good stub is whether an employee can reconstruct their own paycheck from it without asking you.
Three items on that list are more consequential than they look.
The employer legal name and address. Not your trading name, not the name on the door. The legal entity. Several states require this specifically, and getting it wrong is a technical violation that costs real money in the states that care.
Hours broken out by rate. For a nonexempt employee, showing forty-five hours and a total is not enough in states that regulate this. You need the regular hours at the regular rate, and the overtime hours at the overtime rate, separately, so that the employee can verify the overtime was calculated correctly. Whether someone is nonexempt at all is the prior question, answered in the exempt versus non-exempt guide.
Year-to-date totals. Not required everywhere, but the single most useful thing on the stub for an employee, and the thing they will need at tax time when they are trying to reconcile against their W-2. The hours behind them come from your timesheets, which is why an inaccurate timesheet becomes an inaccurate stub becomes a wage claim.
Gross to Net, Line by Line
The entire purpose of a pay stub is to explain one gap: the distance between the salary figure in the offer letter and the amount that shows up in the bank. Here is that gap, opened up.
Two things in that table are worth an employer understanding properly, because employees will ask and a wrong answer erodes trust.
Income tax and FICA are calculated on different numbers
This is the one nobody explains. A traditional 401(k) contribution and a pre-tax health premium reduce the employee's taxable wages, so their federal income tax withholding goes down. But Social Security and Medicare are calculated on the full gross, before those deductions. FICA does not care about the 401(k).
Which means a stub can show a $250 pre-tax deduction, a reduced income tax line, and a Social Security line that did not move at all. That looks like an error and it is not. It is the tax code, and it is on the stub in plain sight, unexplained, generating a question that arrives on your desk every time someone increases their retirement contribution.
Withholding is not the same as the tax owed
The federal income tax line is a withholding, calculated from the employee's Form W-4. It is an estimate of what they will owe, remitted in advance. It is not their marginal rate, it is not their effective rate, and it is not necessarily correct.
An employee who is over-withheld gets a refund. One who is under-withheld owes at filing. Neither means the payroll was wrong. This is the same distinction that makes bonuses look like they were taxed punitively when they were merely withheld at a flat rate, which is covered in the guide to supplemental pay. The W-4 that drives it is collected during onboarding, along with the rest of the tax forms for new employees.
Why the taxes come out in that order
The sequence on the stub is not arbitrary and it is worth understanding once. Gross pay is established first. Then pre-tax deductions come out, producing taxable wages. Then federal income tax is calculated on that reduced figure, using the employee's Form W-4 and the withholding tables in IRS Publication 15. Then Social Security and Medicare are calculated on the gross, not the reduced figure. Then state tax, which may or may not follow the federal treatment of pre-tax deductions. Then post-tax deductions.
Every one of those steps is a line on the stub, in that order, and an employee who understands the order can follow their own paycheck from top to bottom without help. One who does not will see a set of numbers that appear to have been generated at random.
Decoding the Abbreviations
Pay stubs are written in a private language, and the people receiving them were never given the dictionary. Here it is.
The two that generate the most questions are OASDI and FICA, and the relationship between them is the thing nobody gets right. FICA is not a separate tax; it is the umbrella term for Social Security and Medicare together. So a stub showing a FICA line, an OASDI line, and a Medicare line is showing the total and then its two components, and an employee is entitled to wonder why they appear to be paying it twice.
The California Problem
Every state that regulates stub content has rules. California has rules with teeth, and it is worth walking through in detail because it shows how expensive a purely documentary failure can be.
Under California Labor Code section 226, an employer must furnish an accurate itemized wage statement, in writing, containing nine specific items.
Now read the last line of that box again, because it is the entire point and it inverts how most employers think about this. The violation is the document, not the payment. You can pay someone exactly the right amount, on exactly the right day, and still be liable, because the stub was missing your address.
That is not an interpretation. It is how the statute is written and how it has been litigated. A wage statement claim is attractive to plaintiffs' lawyers precisely because it does not require proving anyone was underpaid; it requires only reading the stub, and stubs are uniform across a workforce, which makes them ideal for a class or representative action.
California is the extreme case, but it is not the only state with content requirements, and the shape of the exposure is the same everywhere: a stub is a compliance artifact, and its correctness is a separate question from whether the payroll was right. If you employ anyone there, the full picture is in the California compliance guide.
The Payroll Provider Trap
Here is the assumption that will cost you, and almost every small employer holds it: my payroll provider generates the stubs, so the stubs are compliant.
They are not your compliance. They are your vendor.
The reason this trap is so effective is that the stub looks right. It is professionally formatted, the numbers add up, and it was produced by a system that costs you money every month specifically so that you do not have to think about it. Nothing about looking at it suggests a problem.
But payroll systems are configured, and configurations have defaults, and defaults are not tailored to the specific requirements of the state where your one remote employee happens to live. The system will not tell you that your legal entity name is missing, because it does not know that is a requirement where that person works. This is the same failure mode that shows up throughout small business HR: the tool is fine, and nobody configured it for reality.
What verification actually looks like
How to Read a Pay Stub
You will be asked to explain a pay stub. Probably in the first month of someone's employment, probably about their first check, and probably in a tone somewhere between confused and alarmed. Here is how to walk someone through it in five minutes.
The Consumer Financial Protection Bureau publishes a plain-language tool for understanding a pay stub that is worth handing to an employee who wants to work through it themselves. It is neutral, it is free, and it is not written by a company trying to sell them anything.
The reason this is worth doing properly, once, is that an employee who does not understand their pay stub has no way to know whether they were paid correctly. Which means they either trust you blindly, or they do not trust you at all, and neither of those is a good foundation. Doing it during onboarding, before the first check lands, is better than doing it afterwards in response to alarm.
Tips, Commission, Bonuses, and Other Complications
The simple stub is a salaried person with one rate and no variable pay. Almost nobody is that person. Here is what the complicated ones need to show.
Tipped employees
The hardest stub to get right, and the one most likely to generate a wage claim. A tipped employee's stub needs to show the cash wage you paid, the tips reported, and, if you are taking a tip credit, enough detail that the employee can verify that cash wage plus tips actually reached the minimum wage for the period.
That last part is the whole point. A tip credit is only lawful if the employee actually got to minimum wage. If a slow week means tips came in low and the total falls short, you owe the difference, and the stub is where anybody, including you, would notice. The underlying rule comes from the FLSA.
An employer who is not checking this is running a compliance risk that is invisible from the inside, because the payroll ran, the money moved, and nothing looked wrong. The stub is the only place the problem would surface.
Commission and bonuses
These belong on the stub as separate earnings lines, not folded into gross. An employee who receives a commission and sees only a larger gross number cannot verify the commission was calculated correctly, and a commission an employee cannot verify is a dispute waiting to happen.
There is a second wrinkle. Commissions and bonuses are supplemental wages, and federal income tax may be withheld on them at a flat rate rather than through the normal tables. Which means an employee receiving a $2,000 bonus will see a withholding that looks nothing like their usual rate, and they will conclude they were taxed punitively.
They were not. It is a withholding convention, and the full explanation is in the supplemental pay guide. But the conversation starts at the stub, so knowing what the stub is showing is what lets you end it in thirty seconds.
Overtime, and why the stub has to show the rate
For a nonexempt employee, showing forty-five hours and a single total is not sufficient in most states that regulate content, and it is not sufficient practically either. The stub should show regular hours at the regular rate, and overtime hours at the overtime rate, separately.
Because the entire question in an overtime dispute is whether you paid one and a half times the regular rate for hours over forty. If the stub shows a lump sum, nobody can answer that question by looking at it, including you. Note also that the overtime threshold runs on the workweek rather than the pay period, which is a distinction covered in the pay schedule guide.
Multiple rates
An employee who works two roles at different rates needs both rates on the stub, with the hours at each. Several states require this explicitly. And it matters for overtime, because the overtime rate is based on a weighted average of the rates actually worked, which is a calculation almost no small employer does correctly by hand.
PTO and paid leave balances
Not universally required, but increasingly common, and in some states mandatory. California requires the available paid sick leave balance to appear on the wage statement or on a document provided the same day, a rule explained in the California sick leave guide. This is a small field that is easy to forget and it is a real requirement in the states that impose it.
Garnishments and child support
These appear as post-tax deductions, and they need to be itemized rather than buried in a general deductions line. An employee subject to a withholding order is entitled to see what was taken and to reconcile it against the order. And you, as the employer, need the record showing that you withheld the correct amount and remitted it, because the liability for getting that wrong lands on you, as set out in the section on child support in the arrears guide.
The Stub and the W-2
Every January, an employee compares their final year-to-date figures against the W-2 you sent them, discovers the numbers do not match, and comes to you convinced something is wrong.
Usually nothing is. But you need to be able to explain why, and the explanation is the same one that runs through this entire article: different lines are calculated on different bases.
| W-2 box | What it is | Why it does not match gross |
|---|---|---|
| Box 1: Wages, tips, other compensation | Taxable wages for federal income tax | Gross minus pre-tax deductions. A 401(k) and a health premium both reduce this |
| Box 3: Social Security wages | Wages subject to Social Security | Does not subtract the 401(k), because FICA does not care. But it is capped at the annual wage base |
| Box 5: Medicare wages and tips | Wages subject to Medicare | Also does not subtract the 401(k). And it has no cap, so it is often the largest of the three |
| Box 12 | Coded items such as 401(k) contributions | This is where the money that vanished from Box 1 reappears with a label |
| Boxes 15 to 17 | State wages and withholding | May differ from federal, because states do not all follow federal pre-tax treatment |
Read that table and the January conversation resolves itself. Box 1 is lower than gross because of pre-tax deductions. Boxes 3 and 5 are higher than Box 1 because FICA does not respect those deductions. All three are correct, all three are different, and all three are computable from the year-to-date column on the last stub of the year.
And if the numbers genuinely do not reconcile, you have found a real problem, and you have found it in January rather than in an audit. Which is another way of saying that the year-to-date column on a pay stub is not decoration. It is a control.
Going Paperless
Almost everyone wants to. Most people can. But the order of operations matters, and doing it in the wrong order is how you end up out of compliance without noticing.
Check the state before you flip the switch
Not after. The rule you need is not a general one; it is the specific rule of the specific state where each specific person works. And it may differ between two employees on the same payroll.
| If your state is | Then electronic stubs are | What you must do |
|---|---|---|
| No requirement | Fine | Nothing, legally. Issue them anyway |
| Access | Fine | Make sure they can actually get to them, including after they leave |
| Access and print | Fine, with a condition | The stub must be printable, not merely viewable. Test this |
| Opt out | The default, but reversible | An employee can demand paper at any time and you must comply |
| Opt in | Not the default | You need affirmative written consent before you switch anyone. This is Hawaii |
Access has to outlive the employment
This is the part almost every paperless setup gets wrong, and it is not a legal subtlety, it is an obvious thing nobody thinks about. Your employee leaves. Their account is deactivated. Their stubs are behind that account.
Now they need a stub, because they are renting an apartment, or because they are disputing something, or because a state gives former employees a right to request their records with a deadline attached. And they cannot log in, and you have to go and find it, and you may not be able to.
Any electronic stub system worth having must answer the question: how does a person who left eighteen months ago get a copy of their stub? If the answer is that they email you and you go digging, you have a manual process where you thought you had an automated one. This is what document management is for, and it is why the stub belongs in the personnel file rather than in a payroll portal you do not control.
Printable means printable
In an access-and-print state, the test is not whether the stub exists on a screen. It is whether the employee can produce a physical copy. A portal that renders stubs in a viewer with printing disabled, or that only shows the current period, or that requires software the employee does not have, fails.
Test it yourself. Log in as an employee, if your system allows it, and try to print a stub from six months ago. If you cannot, neither can they.
How Long to Keep Them
Longer than you think, and the clock does not stop when the employee leaves.
| Record | Federal minimum | Note |
|---|---|---|
| Payroll records, including wages paid and deductions | 3 years | The FLSA baseline. This is the floor, not the ceiling |
| Records on which wage computations are based, such as time cards | 2 years | Time cards, work schedules, wage rate tables |
| The itemized wage statement itself | Varies by state | California requires a copy be kept at least 3 years |
| Employee consent to electronic delivery | Varies by state | This is a separate document with its own retention life |
| Records after an employee leaves | The clock keeps running | Departure does not reset the retention period. It is measured from the record, not the relationship |
The row that catches employers is the last one. Retention is measured from the record, not from the employment. An employee who left last year has stubs from three years ago that you still have to hold, and if your system deactivates people and their records go with them, you have just destroyed something you were required to keep.
And with employees in multiple states, the rule is straightforward and unpopular: apply the strictest retention period that reaches any of them. Trying to run a different retention policy per person is a system you will get wrong. Running one policy set to the longest requirement is a system you will get right. The broader picture is in the guide to how long to keep employee records.
Your Best Defense in a Wage Dispute
Now the part that reframes the whole document. A pay stub is not paperwork. It is evidence, and it is evidence that works for you.
An employee claims they were not paid for overtime. Or that a deduction was taken without permission. Or that they worked fifty hours and were paid for forty. What resolves that claim?
Not your memory. Not the payroll provider's reassurance. The stub, showing the hours, the rates, the deductions, dated, itemized, and consistent with your records and their bank statement. That is the document, and it is either there or it is not.
So the calculus is not: how little can I get away with issuing? It is: what document would I want to be holding if someone challenged me in eighteen months? That document is a complete pay stub, retained, retrievable, and matching every other record you have, including your time and attendance data.
Which is why the states that do not require stubs are not really giving you a break. They are giving you the opportunity to make a mistake.
Proof of Income Requests
The most common reason anyone looks at a pay stub has nothing to do with checking your arithmetic. It is that they are trying to rent an apartment, or buy a car, or get a mortgage, and the person on the other side wants proof they have a job.
This is worth understanding as an employer for one reason: it is time-sensitive and it is emotional. Somebody is trying to sign a lease, they have a deadline, and the last three pay stubs are the thing standing between them and it. If getting those stubs requires them to ask you, and you are busy, you have inserted yourself into the most stressful transaction of their year.
A Word on Pay Stub Generators
Search for pay stub and half the results are tools that will make you one. It is worth being clear about what those are for and why they are not for you.
Pay stub generators primarily serve individuals, not employers. A freelancer with no employer needs a document showing income for a rental application. A gig worker needs proof of earnings for a loan. Those are real needs and the tools serve them.
What a generator does not do is connect to anything. It does not know your payroll. It does not file your taxes. It does not deposit anything with the IRS. It produces a PDF that looks like a pay stub.
The employer version of this problem is simple: your stub should be generated by whatever ran your payroll. If those are two different systems, you have created a reconciliation problem that will surface at the worst possible time.
Contractors Do Not Get Pay Stubs
Short section, important point, and it is one that a surprising number of small employers get wrong out of a desire to be helpful.
A pay stub is a wage statement. Wages are what you pay employees. A contractor is not an employee, they do not receive wages, and they do not get a pay stub.
What a contractor gets is: an invoice from them, a payment from you, and a Form 1099-NEC at year end. No withholding, no deductions, no wage statement.
If a contractor needs proof of income, the correct answers are their invoices, their bank records, and their 1099. Not a wage statement you manufactured for them. Where the line actually falls is covered in the guide to independent contractors.
How to Issue a Compliant Pay Stub
The whole thing, in order, for a business that has never thought about this before.
What the Stub Does Not Show
Just as revealing as what is on a pay stub is what is not, and the absences cause as much confusion as the presences.
Your half of the payroll taxes is invisible
Your employee sees Social Security withheld at 6.2 percent and Medicare at 1.45 percent, and they reasonably conclude that is the cost of those programs.
It is half the cost. You pay a matching 6.2 percent and 1.45 percent on top, out of your own pocket, and it does not appear anywhere on their stub. Nor does federal unemployment tax, nor state unemployment tax, nor workers compensation premium.
This is not an argument for putting it on the stub, which would be confusing and in some states probably noncompliant. It is an argument for understanding that the stub is not a full picture of the transaction, and for knowing your fully loaded cost per employee independently of it.
The Social Security cap, and the November surprise
Social Security is only withheld up to an annual wage base. Once an employee's year-to-date wages cross it, the Social Security line stops appearing, and their net pay jumps.
A well-paid employee will notice this in the autumn, conclude that payroll made a mistake in their favour, and either tell you or, more likely, say nothing and quietly worry about it. Nothing is wrong. They hit the cap. Come January it resets and their net pay drops back.
Medicare is the opposite: no cap at all. And per IRS guidance on the Additional Medicare Tax, an employer must begin withholding an additional 0.9 percent once an employee's wages exceed $200,000 in a calendar year. There is no employer match on that extra 0.9 percent. So the same high earner whose Social Security stops in November may see their Medicare go up, on the same stub, which looks like nonsense and is entirely correct.
Imputed income, or the line that taxes you without paying you
The strangest thing on a pay stub, and the one that generates the most alarmed emails. Imputed income is the value of a non-cash benefit that the tax code treats as taxable wages.
| Benefit | When it becomes imputed income | On the stub |
|---|---|---|
| Group-term life insurance | Coverage above $50,000, valued using the IRS premium table | Often labelled GTL. Increases taxable wages, pays out nothing |
| Personal use of a company vehicle | The personal-use portion of the value | Added to taxable wages |
| Gift cards and cash equivalents | Always. There is no de minimis exception for cash equivalents | Taxable wages, always |
| Domestic partner health coverage | Where the partner is not a tax dependent | The employer-paid value becomes taxable |
| Educational assistance above the exclusion | Above the annual limit | The excess becomes taxable wages |
Here is why it alarms people. Imputed income increases the employee's taxable wages, and therefore increases the tax withheld, without increasing the amount deposited. Their gross goes up. Their tax goes up. Their net pay goes down. And they did not receive any additional money, because the additional money was a life insurance policy.
Per IRS guidance on group-term life insurance, the imputed cost of coverage above $50,000 must be included in income and is subject to Social Security and Medicare taxes. Note the specific oddity: it is subject to FICA but the employer is not required to withhold federal income tax on it. So the line behaves differently from every other line on the stub.
Expense reimbursements are not earnings
They appear on the stub because they are paid through payroll, but they are not wages and they should not be taxed. That is true if you run an accountable plan: the employee substantiated the expense with receipts, and returned any excess.
If you do not, and you simply pay people a flat allowance without substantiation, that is a nonaccountable plan, and the entire amount is taxable wages. Which means the mileage allowance you thought was a reimbursement is compensation, and it should be on the stub as such, and it is subject to withholding.
The distinction is worth an hour with an accountant, because the difference between the two is entirely a matter of process, and the tax consequence of getting it wrong falls on both of you.
When the Stub Is Wrong
It will happen. A rate was entered wrong, a deduction was applied that should not have been, the hours came in late. Here is what to do, and the order matters.
The error that costs you is not the one you made. It is the one you found, did not fix properly, and could not later prove you had addressed.
The Annual Twenty-Minute Audit
Everything in this article compresses into one recurring task, and it is short enough that there is no excuse for skipping it. Once a year, sit down with an actual pay stub and check it.
Here is the checklist. Print it, or do not, but do it.
| Check | What you are looking for | Why it matters |
|---|---|---|
| Which states do my people work in? | The physical work location of every employee, not the company address | This is the input to every other question. Remote hires change it silently |
| What regime is each state in? | No requirement, access, access and print, opt out, or opt in | It decides what you must deliver and in what form |
| Is the legal entity name on the stub? | The registered legal name and address, not the trading name | A required field in several states, and one payroll defaults frequently miss |
| Are hours broken out by rate? | Regular hours at the regular rate, overtime hours at the overtime rate, separately | Required in many states, and essential in any overtime dispute |
| Are deductions itemized? | Each deduction on its own line, not aggregated into a single figure | Several states require itemization. A general deductions line can be a violation |
| Can an employee print it? | Actually print it, from an old period, as a non-administrator | Access and print states fail you on this and you will not notice |
| Can a former employee get one? | A person who left a year ago, needing a stub for a rental application | Records requests have deadlines and penalties. Deactivated accounts do not excuse you |
| Do I have consent where consent is required? | Written authorization for electronic delivery, in the states that demand it | Going paperless without this is a live violation you do not know about |
| Does the last stub of the year reconcile to the W-2? | Year-to-date gross against Boxes 1, 3, and 5, understanding why they differ | If it does not reconcile, you have found a real problem in January rather than in an audit |
| What is my retention period, and is it long enough? | The strictest rule that reaches any employee, applied to everyone | Retention runs from the record, not from the employment. Departures do not reset it |
Ten questions. Most of them have answers you already know. Two or three of them will surprise you, and those two or three are the entire value of the exercise.
Common Mistakes
These recur, and note how few of them are about paying the wrong amount.
The unifying error is treating the stub as an output rather than an obligation. It falls out of the payroll system, it looks professional, and so it feels like something that has been handled. It has not been handled. It is a compliance document with state-specific content requirements, retention obligations that outlive the employee, and a liability profile that does not depend on whether you paid anyone correctly.
Twenty minutes reading one, against your state's actual statute, is the highest-return time you will spend on payroll compliance this year. The rest of the recurring small-employer errors are collected in the HR rules and regulations guide.
Frequently Asked Questions
What is a pay stub?
A pay stub, also called a wage statement, earnings statement, or payroll check stub, is a document that itemizes an employee's pay for a single pay period. It shows what they earned before anything was taken out, every tax and deduction that came out, and what they actually received. It also typically shows year-to-date totals. It is the document that lets an employee reconstruct their own paycheck and verify that they were paid correctly, and it is the document an employer relies on when someone claims they were not.
Are employers required to provide pay stubs?
Not by federal law, which surprises most employers. The Fair Labor Standards Act requires you to keep accurate payroll records, but it does not require you to give those records to the employee in the form of a pay stub. The obligation to actually issue a stub comes entirely from state law, and the states differ enormously: a handful require nothing, most require you to provide access each pay period, some require the stub be printable, and at least one requires written employee consent before you can go electronic.
What is the difference between a pay stub and a paycheck?
The paycheck is the payment; the pay stub is the explanation. Historically the stub was the detachable portion of a physical check, which is where the name comes from. Today, with almost everyone paid by direct deposit, there is no physical check at all, but the stub survives as a separate document, delivered on paper or electronically, explaining a payment that happened invisibly. The paycheck answers how much. The stub answers why that much and not more.
What should be on a pay stub?
At minimum: the employee's name and an identifier, the employer's legal name and address, the pay period dates, gross pay, hours worked and the rates for nonexempt employees, every tax withheld broken out individually, every other deduction itemized, net pay, and year-to-date totals. Exactly which of these are legally required depends on your state, and some states require items beyond this list. The practical test is whether an employee can take the stub and reconstruct their own paycheck from it. If they cannot, it is not doing its job regardless of what the law says.
What do the abbreviations on a pay stub mean?
The common ones: FED or FIT is federal income tax. FICA covers Social Security and Medicare together. OASDI is Social Security, and MED is Medicare. SIT is state income tax, SDI is state disability insurance, and SUI is state unemployment. On the deduction side, 401K is a traditional retirement contribution, HSA and FSA are health savings and flexible spending accounts, GARN is a garnishment, and CHSUP is child support. YTD means year to date. Codes vary by payroll system, which is part of why employees keep asking.
Why is my employee's net pay so much lower than their gross?
Because gross pay is the number before anything comes out, and a lot comes out. Federal income tax, Social Security at 6.2 percent, Medicare at 1.45 percent, state and sometimes local income tax, plus their share of health premiums and any retirement contribution. It is entirely normal for net pay to be around two-thirds of gross. This is the single most common question employees ask about their first paycheck, and the answer is not that something went wrong. The answer is that they were looking at the gross number.
Does a 401(k) contribution reduce Social Security and Medicare tax?
No, and this catches almost everyone. A traditional 401(k) contribution reduces the employee's taxable income for federal income tax purposes, so it lowers their income tax withholding. But Social Security and Medicare are calculated on the full gross wages, before that deduction. So an employee contributing to a 401(k) sees their income tax drop but not their FICA. On the pay stub this looks inconsistent, and it is a routine source of confusion that is worth explaining once rather than fielding repeatedly.
Can I provide pay stubs electronically?
In most states, yes, but you need to check yours before you switch. Some states require the electronic stub be printable, not merely viewable, which means a system that displays a stub but blocks printing fails. Some require that an employee can opt out and receive paper on request. And at least one, Hawaii, requires the employee's affirmative written consent before you can move them to electronic delivery at all. An employer who went paperless without checking may be out of compliance and not know it.
How long do I need to keep pay stubs and payroll records?
At least three years under federal law, which is the FLSA requirement for payroll records. Records on which wage computations are based, such as time cards, must generally be kept for two years. Several states impose longer or additional retention requirements, and California specifically requires that a copy of the itemized wage statement be kept for at least three years. When you have employees in multiple states, apply the strictest rule that reaches any of them rather than trying to run a different retention period per person.
What happens if a pay stub is missing required information?
In a state that regulates the content, it can be expensive, and the exposure does not depend on whether you actually paid the person correctly. California is the clearest example: an itemized wage statement missing any of the nine required items exposes the employer to $50 for the first violation and $100 for each subsequent pay period, capped at $4,000 per employee, plus costs and attorney fees, plus potential penalties under the Private Attorneys General Act. A pay stub that omits the employer's address is a violation even if every dollar was correct.
Is my payroll provider responsible if the pay stub is wrong?
No, and this is the most dangerous assumption in the entire topic. In California, courts have made clear that the employer is responsible for the accuracy of wage statements and cannot shift that liability onto the payroll company. Your provider generates the document; you are answerable for it. Which means the correct posture is not trust but verify: pull a stub for each type of employee you have, check it line by line against your state's requirements, and do not assume that because the software produced it, it is compliant.
Do independent contractors get pay stubs?
No, and issuing one is worse than pointless because it is evidence against you. A pay stub is a wage statement, and wages are what you pay employees. A contractor sends you an invoice, you pay it, and at year end you issue a Form 1099-NEC. If you are producing pay stubs for a contractor, complete with withholding lines, you have created a document that looks exactly like the treatment of an employee, and that is precisely the kind of thing a misclassification claim is built on.
Can I use a pay stub generator?
As an employer, you should not. Those tools exist mainly to serve individuals who need a proof-of-income document, and a stub produced by a generator is not connected to your actual payroll, tax deposits, or records. If your payroll runs through a proper provider, the stub is generated as a byproduct of the payment and reflects reality. If you are hand-building stubs in a generator, the document and the underlying payroll can drift apart, and in a wage dispute the discrepancy is far worse than having no stub at all.
What is the difference between gross pay and net pay?
Gross pay is the total earned before anything is withheld: base wages plus overtime, bonuses, commissions, and any other earnings for the period. Net pay is what is left after taxes and deductions, and it is the amount actually deposited. The gap between them is typically substantial, often around a third of gross. Everything a pay stub does, in a sense, is explain that gap, which is why the stub is the answer to almost every question an employee has about their paycheck.
An employee asked for a pay stub for a loan application. What do I do?
Give it to them, promptly and without asking why. Employees need pay stubs as proof of income for apartment rentals, car loans, and mortgages, and this is one of the most common reasons anyone looks at a stub at all. If your stubs are accessible in a self-service portal, they can get it themselves and you never hear about it, which is the ideal outcome. If your process requires them to ask you and wait, you have created a small, recurring, entirely avoidable piece of friction at exactly the moment they need speed.
Do I have to give a pay stub to a terminated employee?
For the final paycheck, yes, in any state that requires stubs, and the obligation does not end there. Former employees generally retain the right to request their payroll records, and states impose deadlines on producing them. California, for example, requires that an employee or former employee be given access to their records on reasonable request and imposes a penalty if the employer does not comply within 21 days. Which means your access to old stubs has to survive the employee's departure, not just their employment.
Why does the pay stub show different dates than my payday?
Because the stub shows the pay period, meaning the range of dates the work was actually performed, while the pay date is when the money arrived. Those are different, and the gap between them is the arrears: you pay for work after it has been completed, which is how nearly every US employer operates. An employee receiving a stub on the 23rd covering work from the 5th to the 18th is looking at exactly what they should be looking at, and explaining that once at onboarding prevents the question entirely.
What is OASDI on a pay stub?
OASDI stands for Old Age, Survivors, and Disability Insurance, which is the formal name for Social Security. It appears as a deduction of 6.2 percent of gross wages, up to the annual wage base limit. It is one half of what is collectively called FICA, the other half being Medicare at 1.45 percent with no cap. If your stubs print OASDI rather than Social Security, expect to be asked what it means, and consider simply relabelling the line to something a human can read.
Why did my employee's Social Security tax not go down when they increased their 401(k)?
Because Social Security and Medicare are calculated on gross wages, before pre-tax deductions, while federal income tax is calculated on wages after them. A traditional 401(k) contribution reduces taxable income, so income tax withholding falls. It does not reduce the wages subject to FICA, so Social Security and Medicare do not move at all. On the stub this looks inconsistent and it is entirely correct. It also explains why Box 3 and Box 5 on a W-2 are typically higher than Box 1.
Should a pay stub show PTO balances?
It depends on the state, and increasingly the answer is yes. California requires the available paid sick leave balance to be shown on the wage statement or on a separate document provided the same day. Other states have their own rules. Even where it is not required, showing accrued balances on the stub is worth doing: it answers a question employees ask constantly, it makes accrual visible rather than mysterious, and it means nobody is surprised by their balance when they try to book time off.
What is the difference between a pay stub and a W-2?
A pay stub covers a single pay period; a W-2 covers the whole year. The stub is issued by you every payday and shows what happened that period plus year-to-date totals. The W-2 is issued once, in January, and reports annual wages and withholding to the employee and the Social Security Administration. The two should reconcile, but they will not match line for line, because W-2 Box 1 subtracts pre-tax deductions while Boxes 3 and 5 do not. The final stub of the year is the tool for checking that reconciliation.