Itemized Pay Statements Aren't Required for Every Employee---Yet

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The Obama administration has issued final rules and guidance to implement Executive Order 13673, Fair Pay and Safe Workplaces, which includes a paycheck transparency provision for covered federal contractors.

The provision, which ensures that contractors' employees have the necessary information to verify the accuracy of their paychecks, would require contracting agencies to ensure that workers on covered federal contracts and subcontracts receive a wage statement that contains information concerning hours worked, overtime hours, rate of pay (or basis of pay, if not hourly), gross pay and itemized additions made to or deductions made from pay. The executive order, signed in 2014 by the president, applies to new federal contracts of more than $500,000 starting in 2016.

The paycheck provision, effective Jan. 1, 2017, would apply only to employees working on federal contracts and subcontracts. A wage statement must be provided to every worker subject to the Fair Labor Standards Act, all laborers and mechanics subject to the Davis-Bacon Act and all service employees covered by the Service Contract Act, whether the worker is classified as an employee or independent contractor, the final rule says.

The FLSA has no provisions requiring itemized pay statements.

Four states and the District of Columbia require or will require employers to provide information similar to that required by the paycheck provision.

Alaska requires employers to give all employees an itemized statement showing such information as rate of pay, gross and net wages and board and lodging costs.

California requires employers to give all employees an itemized statement showing such information as gross wages, total hours worked (unless the employee is salaried and exempt from overtime) and all deductions. Effective Jan. 1, 2017, employees exempt from minimum wage and overtime payments also are exempt from requirements regarding information on total work hours.

Employers in the District of Columbia must give all employees an itemized statement showing the payment date, gross wages, all deductions and additions, net wages and hours worked.

Employees in New York State must receive an itemized statement showing gross wages paid, all deductions, net wages and, upon request, an explanation of how wages were computed. The statement must also show such information as dates covered by the pay statement and pay rates and basis, whether by the hour, shift, week, salary or other.

Employees in Oregon must receive an itemized statement showing such information as total gross wages, amounts and descriptions of deductions and rate of pay.

Effective Jan. 1, 2017, an itemized statement must also include the payment date, employee name, employer's state business registry number or business identification number, compensation structure, any allowances claimed as part of minimum wage and the number of regular hours worked and the number of overtime hours worked, as well as pay rates and total pay for each, unless the employee is salaried and exempt from overtime.

If every employee is to receive an itemized pay statement one day, the provision will most likely gain traction at the state level before becoming a requirement at the federal level.

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