Find out more about paychecks, how they’re issued, and how pertinent information is recorded.
What Is a Paycheck?
A paycheck is a check that an employee is given as payment for services rendered. The employee then cashes the check to receive the money. The employee also could elect to have the paycheck directly deposited into their bank account, so their pay shows up automatically on payday. A paycheck is typically issued every two weeks, although some employers issue paychecks weekly or monthly. Attached to a paycheck is usually a paycheck stub, also known as a pay stub, payslip, or earnings statement. It is the part of the paycheck that documents how much money employees were paid and is usually attached to the employee paycheck.
Who Gets a Paycheck?
Salaried or exempt employees generally receive 26 paychecks a year with compensation paid in equal installments. Non-exempt employees, who are often asked to punch a time clock, turn in the exact hours worked so overtime is fairly paid in accordance with the Fair Labor Standards Act (FLSA).
Types of Paychecks
Traditionally, paychecks were printed on paper. Employees may still receive a paper paycheck, but increasingly paychecks are delivered electronically. Your human resources department can help you arrange to have your paycheck directly deposited to your bank account, so you can eliminate the need to cash your check. Your pay will show up in your account automatically.
Where to Get Your Paycheck
Your employer will give you or mail you your check. If you’re not sure how to access your paycheck, ask your human resources department. Many organizations use a third-party vendor such as ADP to process employee paychecks. Employees have access to their records on the third-party website. You may need to register with a username and password to access your information.
What to Do If You Don’t Receive Your Paycheck
You have the right to be paid for your work, and you have the right to a timely paycheck, although rules vary by state as to when paychecks must be issued. If you have not received your paycheck, begin by inquiring with your company’s human resources department. Sometimes there is simply a mixup and your check will be delivered immediately. If not, you can put your request for your wages in writing and deliver it to your employer. If your employer is deliberately withholding your pay, you can file a claim against them. Contact the U.S. Department of Labor’s Wage and Hour Division or your state’s labor department. It may be necessary to file a suit in small claims court or superior court to obtain the payment you’re owed. In that case, you may wish to hire a labor attorney to help you.
How to Read a Paycheck
A traditional paper paycheck contains:
The name and address of the companyThe employee’s name and addressThe check numberCheck amountDateEmployer’s bank routing and account numbers
This information ensures the proper amount is withdrawn from the employer’s bank and delivered to the correct person. When the employee deposits or cashes the paycheck, he or she can easily tear off the paycheck stub for personal record-keeping purposes. Paycheck stubs provide the details of the employee’s pay and the exact deductions that were made during each pay period of the year. You’ll typically find the following information on a pay stub:
Starting date and ending date of the pay period Gross pay, which is the amount of money the employee was paid before the employer took deductions Net pay, or the amount of money the employee receives after the employer takes out deductions Federal taxes withheld State taxes withheld Local taxes withheld if any Insurance deductions Medicare deduction Social Security deduction Retirement, pension, or 401(k) plan contribution Wage garnishments
The paycheck stub may also include information such as year-to-date totals of gross and net wages and deductions.
Payroll Withholding
When issuing the paycheck to an employee, the employer is legally required to withhold a certain percentage of the compensation to pay income tax and Social Security. The employer regularly sends the amount withheld, plus additional Social Security paid by the employer, to the Internal Revenue Service (IRS). This gives the IRS an accounting of what you were paid and how much money was withheld. When tax time rolls around, the IRS can check your tax return against the records it received from your employer. The employer may withhold additional amounts of money from the paycheck when the employee is required to pay for a portion of the benefits plan.
Wage Garnishment
Garnishment is the process of taking money from an employee’s paycheck to pay off a debt that the employee owes. The garnishment is usually the result of a court order or a tax collection. The employer is required to cooperate with a wage garnishment order. When wages are being garnished, the employee has the money owed deducted from their paycheck until the debt is paid off or until the employee makes other arrangements to pay off the debt. Garnishment most frequently occurs for these unpaid commitments:
Child supportStudent loansFederal, state, and local taxes
