Decoding Employee Paystubs
The field of human resources is changing. In our HR Redefined series, we give innovators a medium to share personal reflections, professional advice, and best practice guidance.
The following has been adapted from a presentation given at HR Redefined 2018.
Everyone loves a pay day. For employees, it’s a day when bank accounts are replenished and bills can get paid. For HR professionals, it marks another payroll processing cycle in the rearview mirror.
Getting paid on time, every time might seem like magic. When the dust settles, employees are left with slips of paper to help them make sense of it all: their paystubs. Let’s break down the nuances of this sometimes overlooked document, and why it’s important to always “check your check.”
As we sometimes say in payroll, don’t snub the stub. In the event something is wrong, checking your paystub sooner rather than later can reduce risk to both the employee and the employer. Getting ahead of issues also ensures a clean Form W-2 and reduces the chances that you’ll unexpectedly owe additional taxes come filing season.
Whether this is your first or hundredth paycheck, it’s critical to check your personal information, including the spelling of your name, your address, and whether you’re set up with the right marital status and exemptions. The latter information has a direct impact on how much you should be taxed.
It’s also important to check what pay period the paystub is meant to cover. In other words, is the company paying you for the prior or current week? Are you being paid on a weekly, biweekly, or semi-monthly basis? Knowing this information can help employees anticipate fluctuations in their pay, as paychecks won’t necessarily cover an equal amount of hours worked due to holidays and vacation days.
Once you have the basics locked down, you’ll want to review your earnings per pay period. If you’re an hourly employee, make sure that the hours you worked in the pay period are the hours you're actually being paid for, and check that your rate of pay is the amount you agreed to. This also holds true when you’re being paid out vacation or sick time.
Some employees receive bonuses or commissions. It’s important to review that these payments are being treated differently, as they carry separate tax implications than regular pay. A quick review here can ensure that you're being paid properly and if there is an error, it can be resolved quickly.
Taxes and Deductions
You don’t have to be a tax expert to make sense of your paystub. First, confirm that the state you’re working in is actually the one you’re paying taxes to. This is especially important if you’ve recently moved. Make sure that your new address is accurately reflected.
It’s not uncommon for employees to live and work in different states or cities. If you or your employer have any questions about multi-state taxation or commuting between states, your payroll provider can always help. If you don’t think enough is being withheld from your paycheck, use an online calculator or speak with a tax accountant. You might need to change your allowances to avoid owing when you file.
In addition to taxes, don't forget to check on your benefits deductions. Did you company just add a 401k match program? Did you just go through open enrollment or decide to upgrade your dental plan? Whatever the benefit, payday is the perfect time to review that the correct amounts are coming out of your earnings. Each benefit should be clearly labeled on your paystub.
When and Where to Check
Namely’s user data shows that most employees who view their paystubs do so within the month they’re paid. Ideally, most of these check-ups should be happening on pay day.
For faster resolutions to any potential issues, it’s a good idea to review your paystub on the actual check date. A quick review can lead to quicker resolutions and can help confirm any changes in deductions or rates. It’s especially important to review your paystub after open enrollment or after a raise.
Though some companies still deal in paper, most readers likely have access to digital paystubs. Depending on your company’s payroll system, you should be able to access this information online. With a recent product update, Namely users will even be able to view their paystub on-the-go via the company’s iOS mobile app, downloadable here.
At a small or mid-sized company, it’s often HR’s most essential responsibility: ensuring employees get paid accurately and on time. Unfortunately, “essential” rarely translates to simple.
Whether you’re an HR beginner or a veteran, we’ve compiled everything you need to know about payroll. How do you settle on a pay cycle? How do you keep track of federal and state taxes? We cover all of these questions and more in the Definitive Guide to Payroll.
See how Namely's flexible solution will help you streamline your HR processes by having your people, payroll, and benefits info all in on place.Get a demo
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