As long as you get paid on time, you probably don’t bother checking your pay stubs. You may not even get a paper copy of your pay stub. If your job is like most others, your pay is directly deposited into your bank. Afterwards, you have to log into Workday (or some other payroll system) to see your pay stub. And, let’s be honest, most people don’t.
That’s a huge mistake.
Your pay stub is a treasure trove of information. It confirms your employer is paying taxes so you don’t get hit with a huge bill come tax time. It ensures you’re getting all the benefits you signed up for. And it shows how your employer calculated your pay. Those calculations aren’t always accurate, so it’s worth knowing how to read your pay stub. Once you do, you’ll know how to spot when something’s off.
What is a pay stub?
Pay stub, pay slip, pay statement—they’re all words that refer to the same thing. When you get paid at work, your employer is supposed to give you a statement outlining the details of your pay for that period. Back in the day, pay stubs used to be attached to your physical paycheck. Nowadays they’re almost always electronic. If so, your employer should give you access to its payroll system so you can view, download and print them.
What information goes on a pay stub?
In Texas, employers are required to give you a pay stub with each paycheck. The pay stub typically includes:
- Your employer’s legal name and address
- Your full name and address
- The beginning and end dates of the pay period
- The pay date, which is when your paycheck was deposited into your account
- Your pay rate (e.g., $20.00 per hour)
- Your gross pay, or wages you earned before taxes, benefit contributions, and deductions
- Any deductions made, and the reason for the deductions
- The net pay, which is your take-home pay (after all taxes and deductions are subtracted)
- The total amount of hours you worked that pay period
There may also be some extra information too. It’s common to see the vacation time or paid time off (PTO) you have earned that pay period. If your job offers sick pay, the total amount you’ve earned may also appear on your pay stub.
Start at the top
At the top, you’ll find your background information. Make sure your name and address are correct. It may not seem like a big deal, but if you’ve moved and your address is an old one in another state, for example, you may be paying taxes in that state even though you no longer live or work there. If that happens, reach out to your employer’s payroll or HR department. Let them know that you’ve moved and request an update.
Then head to the earnings section
If you’re like me, you probably go right to this section. Makes sense. It’s where you will find the breakdown of how much you’ve earned in the pay period. Your regular pay, overtime pay, special pay, bonuses, and commissions should all appear here. Together, these make up your gross pay, which is the total amount of your earnings before any taxes or other deductions were taken out. You’ll typically see amounts for the current pay period, and a column that adds up your year-to-date earnings.
Below that, you should see your net pay. Your net pay is the total amount you’ll take home after all of the deductions are made. It should match the amount directly deposited into your bank account or your payroll card.
Deductions: what gets taken out of your paycheck
Speaking of deductions, they should be on your pay stub too. Sometimes deductions are sandwiched between gross pay and net pay. If not, they may be found in their own section. Deductions are amounts that are withheld from your pay. Some are mandatory. Federal law requires employers to withhold money to pay certain taxes, like Social Security and Medicare taxes. You might see these labeled as “FICA” on your pay stub.
Other deductions are optional. They cover things like health insurance premiums, 401(k) contributions, and union dues. Your pay stub should specify the amount taken out of your paycheck to cover your insurance.
But you shouldn’t see any optional deductions unless you’ve given your employer written consent to take the money out of your paycheck. That’s because it’s illegal, in Texas, for your job to deduct your wages without your consent. So if you see a deduction you don’t recognize or never authorized, alert HR immediately. Give them the chance to correct it. Most will. If not, you may need to take it further. But we’ll get to that.
Now that you know what to look for, here’s how to catch errors costing you money
Reading a pay stub is straightforward once you know the parts. But knowing the layout is really just preparation for the more important skill: catching errors. And errors happen more than most people realize, especially with overtime pay. Employers miscalculate overtime pay all the time, and it almost never works in the employee’s favor. Here are the most common mistakes to watch for.
Straight time pay for overtime hours
One of the biggest mistakes I see on pay stubs are improper overtime calculations. These mistakes almost never benefit the employee.
Take a look at this real pay stub. Mr. Gutierrez, who works in construction, got it after a week of work. At first glance, it looks like any other pay stub (except for our redactions, of course). But if you look closely, there’s a problem. Although Mr. Gutierrez put in 11.5 hours of overtime work at his construction job this week, he wasn’t paid 11.5 hours of overtime pay. According to his pay stub, Mr. Gutierrez was paid only 2.75 hours of overtime pay. The remaining 8.75 overtime hours were paid but only at his regular straight-time rate. So he never got the overtime premium for those extra hours, and was still owed $122.50 on payday.
Excluding pay and shift differentials when calculating overtime (OT)
Employers commonly mess up shift differentials too. A shift differential is extra pay you get if you work an unpopular shift that others don’t want. Nights. Weekends. Holidays. Basically, any shift that’s outside bank hours. Your pay stub should mention the pay differential and the specific amount you get. But one common mistake I see on pay stubs is that employers exclude your pay differential when calculating your overtime rate.
It’s from Travis, who worked in a call center. Occasionally, he would work second shift and when he did he was paid a shift differential: an extra $13.80/hour. That shift differential wasn’t counted when his employer calculated his overtime pay. As you can see, his regular pay rate before the differential was added equals $13/hour. While he was paid overtime this pay period, the OT pay rate was only $19.5/hour or 1.5x his regular pay rate. It did not account for the shift differential pay. Had it included the shift differential, as the law requires, Travis would have been paid $20.70 per hour of overtime. Every OT hour he worked, his employer shorted him $1.2/hour. On it’s own that may not seem like much; but, it added up the longer Travis worked long hours for the company.
Not paying any overtime at all, even when you’ve worked more than 40 hours a week
A lot of people think you can’t get overtime if you’re salaried. Not true. Whether you get overtime pay depends on if your job is exempt or non-exempt. As long as you work a non-exempt position, you should be paid overtime when you work more than 40 hours a week. Some employers misunderstand this and end up paying no overtime no matter how much you work. Here’s what that might look like on your pay stub.
Check out this pay stub. It’s from Johnny, who worked in the oil and gas industry. His pay stub covered a two week period. During those two weeks, he worked his tail off. Johnny logged 173 hours. Much more than 40 hours. So he was owed overtime pay. But he didn’t get a dime of it for these two weeks. How do we know? Because there is no mention of overtime pay on his pay stub.
That’s a red flag.
If your job is non-exempt and you’ve worked more than 40 hours in a single workweek but your pay stub doesn’t show any overtime pay at all, something isn’t right. It may be a misclassification issue, or it may be a payroll error. Either way, it’s worth a closer look.
What to do if you discover errors on your pay stub
If you spot a problem, document it. Write down the discrepancy and save copies of the pay stubs in question. From there, raise the issue with your manager or HR representative and give them the opportunity to make it right. If they don’t, don’t panic. You still have options. You can file a wage claim with the labor board, submit a complaint with the U.S. Department of Labor, or pursue a private lawsuit against your employer. A wage and hour lawyer can help you decide which route makes the most sense for your situation.
This is exactly the kind of matter we help workers with everyday. If you’d like to chat with a wage and hour lawyer from our office, request a complimentary consultation. We’d love to help.