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Navigating through state pay statement requirements

When employers need to consider regulations regarding pay statements, it’s at the state level. In fact, there is no federal statute that even requires employers to produce a pay statement for each employee, although the Fair Labor Standards Act (FLSA) does mandate accurate records of wages paid and hours worked.

Still, as of mid-2020 most states have their own laws requiring pay statements from employers. Only nine states have absolutely no pay statement-related requirements, while the other 41 enforce a wide range of rules governing everything from whether a statement needs to be on paper or electronically, to what kinds of information it must include.

For employers, this wide range of requirements can be complicated, leading to compliance headaches. It can be difficult to keep track of all the regulations. And noncompliance can be costly. An error or omission can create significant liabilities in states, such as California, which have especially complex requirements.

Pay statement assistance is essential in this context. Let’s look at some of the variance in state labor laws related to pay statements and what you can do to stay on top of them.

How pay stub requirements vary by state

State-level regulations for pay statements range from the minimalistic to the very involved. We’ve categorized them into five different groups of requirements: 

1. No requirements

States this applies to: Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Ohio, South Dakota, and Tennessee

These states do not require employers to provide detailed information to employees in pay statements. Employers who opt to do so anyway may choose to transmit the statement electronically instead of via paper record.

Despite not mandating pay statements for employees, no-requirement states may require recordkeeping of related information such as rate of pay, employees names, addresses, occupations, and pay amount per pay period. This is the case in Arkansas, for instance. In contrast, Alabama does not require the maintenance of any employment-related documents, making FLSA the only applicable law in this regard.

2. Access

States this applies to: Alaska, Arizona, Idaho, Illinois, Indiana, Kansas, Kentucky, Maryland, Michigan, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Dakota, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Utah, West Virginia, Wisconsin, and Wyoming.

The access arrangement, which together applies to half of all states as of 2020, requires employers to produce pay statements for their employees. These statements do not have to be in written or paper form, though, meaning an electronic statement is fine.

As with the no-requirement states, there is some variance in how the access states regulate pay statements. For example, Nevada requires a list of itemized deductions in each pay statement, while Kentucky does the same, except only for employers with 10 or more employees.

Alaska requires more specific information, such as contributions under the Alaska Employment Security Act. Recordkeeping requirements also differ between access states, which may or may not include provisions for maintaining Social Security numbers and precise timekeeping.

3. Access plus print/written

States this applies to: California, Colorado, Connecticut, Iowa, Maine, Massachusetts, New Mexico, North Carolina, Texas, Vermont, Virginia (starting in 2020), and Washington.

In this category are the states that require employers to produce written/printed statements for employees. Printable electronic statements are generally accepted as compliant with the laws of these states.

Virginia, which began requiring written statements for all exempt and non-exempt employees on Jan. 1, 2020, requires the state’s employers to provide a paper or online record detailing items such as deductions, the name and address of the employer, the rate of pay, the number of hours worked per period, and the gross wage earned during that same timespan.

Other access/print states go further in what they require. California is the most notable example, as employers there must use its specific format and include a considerable amount of information not required in most other states. Employers can struggle with California compliance due to a one-size-fits-all approach that doesn’t account for the Golden State’s requirements to list the employer’s full legal name (not just the one it does business as) as well as available number of sick days – the latter in compliance with California’s Healthy Workplace Healthy Family Act of 2014.

4. Opt-out

States this applies to: Delaware, Minnesota, and Oregon.

These three states allow employees to opt out of receiving electronic statements and instead receive paper statements. In other words, employers in these states need a fallback option to paper statements if employees decide not to receive electronic statements.

5. Opt-in

State this applies to: Hawaii.

Hawaii requires employees to consent to receiving electronic pay statements. Paper statements are the default.

Additional challenges with pay statements…and how to overcome them

Beyond the various legal requirements across the states, pay statements can also be complicated by the need to include other specific types of information in filings. Proper branding after a merger or acquisition, industry-specific requirements, and union pay are three examples of specialized information that might go into a customized pay statement. We have covered these particular complications and others in this post, so be sure to check it out.

Cybersecurity is another concern in pay statement preparation. Since these records typically contain sensitive information, it’s important to implement secure access and management systems that can help employees find what they need in the safest way possible. CIC Plus can help streamline your pay statement issuance and compliance. We keep pace with changes to pay statement regulations at all levels of government, enabling us to format and customize your statements to meet all state requirements, along with any unique needs of the employer. Contact us today to learn more.