Legal Troubles to Avoid when Using Electronic Pay Stub
If you have been following the series mad men, perhaps you remember a few scenes when Roger Sterling offered someone a wad of cash to complete a task for him. Well, it’s safe to assume that the transaction wasn’t reported to the IRS. Gone are the days when employers used to pay their workers in cash. Everyone now wants the cost-effective, paperless, and most efficient way of handling payroll tasks – the electronic pay stub.
Are you an entrepreneur or corporate manager and have implemented such a sophisticated payroll solution? Congratulations! Not only will the paperless payroll system save you a lot of time and money for your business but it’s also friendlier to the environment. In case you still handle your payroll activities manually, you can still build a pay stub now and forget about the printing expenses and potential storage or disposal expenses associated with payroll record.
It’s wise to comply with all the local, state, and federal requirements regarding the use of paperless payroll systems.
Not every state require a pay stub
The law requires every employer to accurately record the number of hours each worker has worked and the wages paid to workers. However, there is no federal law stating that you must avail an electronic pay stub system in your business.
Well, this leaves a lot of room for your interpretation. Each state has its set local laws and preferences about companies handing out electronic pay stubs. Currently, only eight states with no set laws requiring companies to offer their workers pay stubs of any kind unless they ask for the record of their wages.
Each state has specific pay stub requirements
Different states may have different laws regarding the issuance of electronic pay stubs. For example, Hawaii requires workers to opt-in to getting their pay stubs electronically. Other states may allow people to opt-out of getting their pay stubs electronically. In some states, the employer can implement an electronic pay stub system but must make it possible for the employees to print them.
The law regarding the use of pay stubs varies from one state to another. Therefore, it’s important to understand your state requirement and ensure that they are met to avoid legal troubles.
But access is important
Whether your state requires giving out pay stubs or not, workers must always have some way of accessing their wage and pay information. Access to such information is a requirement to prevent payment disputes. It’s also used in the employment verification for loans, apartment rental, and other similar issues.
Accuracy is important too
Complying with your state laws requirements regarding receiving and having access to pay stubs is crucial. It’s also imperative to ensure that your electronic pay stub has all the correct details in it. Each pay stub must include;
- The wage or rate of pay
- Hours worked and period start and end dates
- A detailed breakdown of the hours paid for
- All taxes including local, state, and federal
- All the deductions made
- Gross and net earnings
Having a detailed pay stub gives your workers all the information they need to manage their money. It’s also a way of documenting everything and can be used to solve wage disputes.