Pay Stub Sample

Where Did All My Money Go? A Glance at a Pay Stub Sample

Do you remember when you received your first real paycheck? If you do, you may also recall that the amount you actually received was somewhat less than you originally anticipated. This kind of disappointment is very common for new employees—employees who have yet to learn about the many deductions that may be applied to earnings—but if you’re an employer who would like to help your employees avoid this inevitable disappointment, one strategy you can use is to provide a type of new employee orientation using a pay stub sample.

What Items Should a Pay Stub Sample Cover?

When employees first go to work, one of the first things they are told by the hiring company is the rate of pay they will receive for their service. For most employees this means an hourly rate, such as, say, $10.00 an hour (save those employees who wait to go to work until after they have finished college or a training program at which time they may receive an annual salary). Next, these employees are most likely added to the work schedule for a set number of hours, and are paid based on the company’s pay schedule, either once a week, bi-weekly or monthly. What many employees are not informed about, however, are the deductions that will be taken out of their check each pay period. Thus, when the employee multiplies the number of hours he or she has worked by their rate of pay, they naturally get their heart set on a certain amount—an amount that unfortunately doesn’t materialize.

To avoid this confusion, many managers choose to hold a training session through which employees are made aware of the various deductions that may be withheld from their paychecks, and what each of these deductions mean. They do this by showing each of them a pay stub sample, complete with all of the deductions they can expect. This is a great way to educate new employees, and it shows that the company is committed to open communication.

Some of the items that may appear on this pay stub sample include:

Hourly Rate. This is the amount of money the employee will make for each hour worked.
Hours Worked. This is the total amount of hours the employee has worked in a given pay period.
Amount Paid. This area should reflect the exact amount of money the employee has earned during the pay period.
Year to Date Earnings. This section shows the cumulative amount of money the employee has earned thus far in the calendar year.
Gross Pay. Gross pay is the amount of earnings before deductions.
Net Pay. Net pay is the amount of money the employee will receive after all deductions have been applied.
State and Federal Income Tax. This section shows the employee the amount of money that has been deducted to pay for income tax.
Social Security and Medicare. Social security and Medicare taxes withheld (this amount is usually matched dollar for dollar by the employer).
Insurance. Insurance could include items such as health and dental insurance, life and disability insurance, and insurance for workman’s compensation should the employee become injured during the course of employment.
Retirement. Although most first time employees will typically not pay into a retirement plan, older employees might notice deductions for either their retirement pension or a 401k plan.

Providing your employees with a pay stub sample can help clear up a lot of confusion and possible disappointment when it comes time for them to receive their first paycheck. In addition, these types of documents are a great training tool for employers seeking to further the financial education of their new employees.