Mike Dolt Enterprises
Mike Dolt Enterprises
User: Winning DUH, Location: Midwest
Asked on: Tuesday, April 19, 2011 at 10:27 am EDT
Answered on: Tuesday, May 14, 2024 at 4:23 am EDT
Question: Here is my question;How much information do you include on employees check stubs? Specifically do you show the amount of money paid towards insurance and benefits by the employer?I had dinner not too long ago with two restaurant owners. Both of the restaurant owners provided their employees with insurance and 401K in addition to the hourly wage.Owner #1 said he put YTD gross, YTD net, weekly hours, and weekly net. Also showing deductions for taxes, and employee?s contribution to the benefits. The employers cost of insurance was not shown and the employer matching of the 401K was not shown on the check stub.Owner #2 did show all the costs of matching 401K funds and the cost of insurance. So the top line on owner #2?s check stubs would show the cost in hard dollars what the employee really cost for a week?s work.Owner #2 was of the opinion that if he showed the employees the total amount of compensation that they were receiving that the employees would be less likely to change jobs because the employee ?could see? the amount of money they were making. That way if the worker was presented with new work opportunity the worker could ?do the math him self?.I also worked for an electrical contractor that four times a year would send out a letter stating that ?ACME Electric has paid x amount of dollars into your social security and x amount in matching funds by the employer into various tax accounts.?Is it a good idea to constantly show employees how much they are making or should all of the fringes, taxes, and additional benefits just be paid and not brought to the employees attention?How do you handle it?
Information Included on Check Stubs
The specific information included on employee check stubs can vary depending on company policy and state regulations. However, common information typically shown includes: Gross pay
Total amount earned before deductions.
Net pay
Amount payable after deductions are taken out.
YTD Gross/Net
Year-to-date earnings or deductions.
Weekly hours
Hours worked during the pay period.
Deductions
Taxes (federal, state, etc.), employee contributions to benefits (health insurance, 401(k)).
Employer's Costs vs. Employee Deductions
It is not common practice to show the employer's cost of insurance or 401(k) matching on employee check stubs. However, Owner #2's approach of showing these costs can have advantages and disadvantages
Advantages:
Transparency
Employees have a clear understanding of their total compensation, including benefits.
Retention
Employees may be more likely to stay with the company if they see the value of their benefits.
Disadvantages
Complexity
Check stubs can become cluttered with additional information.
Employee confusion
Employees may not fully understand the significance or calculation of employer-paid benefits.
Confidentiality
Employer costs can be considered sensitive information.
Paying Fringes and Benefits vs. Bringing to Employee AttentionPros of Paying and Not Showing
Privacy
Employees are not burdened with complex financial information.
Simplicity
Check stubs are easier to read and understand.
Pros of Showing
Education
Employees learn the true cost of their benefits.
Appreciation
Employees may appreciate the value of their compensation.
Transparency
Builds trust and understanding between employers and employees.
How to Handle It
The best approach depends on the individual company and its employees. Consider the following: Employee demographics
Are employees likely to understand and appreciate the information?
Company culture
Does the company promote transparency and open communication?
State regulations: Check local laws and regulations to ensure compliance.Ultimately, it is important to provide accurate and timely information to employees so they can make informed financial decisions. If showing employer costs is considered, it should be presented clearly and in a way that employees can easily understand. Flag for review