Pay Stub Regulations in Alabama
Before distributing pay stubs to employees and contractors in Alabama, it's essential to understand the pertinent laws and regulations governing employers in the state.
This guide outlines the requirements and guidelines for running payroll and issuing pay stubs in compliance with Alabama laws and regulations.
Pay stub regulations in Alabama
1. Are pay stubs required by law in Alabama?
It’s not mandatory for employers in Alabama to provide employees with pay stubs. However, federal law requires all employers covered by the Fair Labor Standards Act (FLSA) to maintain a record of employee payments for at least 3 years.
2. How often do you need a pay stub in Alabama?
Although there’s no law for employers to provide pay stubs to their employees and contractors, it is recommended that you issue pay stubs every time you pay an employee.
3. What information can be included on a pay stub in Alabama?
Since there’s no law for pay stubs, you can include the information listed below:
- Employee information such as name, last 4 digits of social security number, and address
- Employer information such as name, employer identification number (EIN), and address
- Pay period
- Gross earnings before deductions
- Taxes withheld
- Employee contributions
- Deductions
- Net pay
4. Does Alabama have a state income tax?
Yes, state income taxes are applicable to employees in the state of Alabama.
5. Are there any other taxes applicable to Alabama?
No. There are no local taxes in addition to federal and state income taxes applicable to employees in the state of Alabama.
Information needed to generate pay stubs
To provide employees with accurate pay stubs, the information below is required.
- The employee’s exemption status from state withholding
- Information such as filing status, number of dependents, and additional state withholding.
Have all the information handy?
With SecurePayStubs, you can calculate accurate federal and Alabama state taxes for your employees and generate pay stubs securely.
Alabama wage and hour laws
Employers are required to provide minimum wage, overtime pay, meal and rest breaks, and paid time-off benefits to all non-exempt employees.
The law covers the following:
Minimum wage
No minimum wage set by the state of Alabama. However, employers are required to pay at least $7.25/hr for 2024 based on the FLSA.
Overtime pay
Alabama doesn’t have a law for overtime pay. So, employers are required to pay for overtime based on the FLSA. According to FLSA, employees who work more than 40 hours a workweek should be paid an overtime pay of 1.5 times the regular pay rate.
Meal breaks
Meal breaks up to 30 minutes are not considered work hours and they are not included in pay. However, if an employee is required to work during lunchtime, then the employer is required to pay for the meal break.
Rest breaks
Alabama doesn't have a law for rest breaks. So, employers are required to follow FLSA. According to FLSA, employers are not required to provide lunch or coffee breaks during work hours.
Paid time off and leave
Employers in Alabama need to provide required and non-required leaves for their employees.
| Required leaves | Non-required leaves | |
|---|---|---|
| Paid | Unpaid | Paid and Unpaid |
| Holiday leave on federal and state holidays. If employees are working on holiday leaves, employers need to compensate them. | Family and Medical Leave (FMLA) of up to 12 workweeks during one year for serious health conditions, childs birth, or taking care of sick family member | Vacation leave |
| Jury leave | Voting leave of up to 1 hour | Sick leave |
| Military leave | Emergency response leave of up to 15 days for employees who are certified Disaster Services Volunteers of the American Red Cross | Holiday leave for private employers |
| Bereavement leave | ||
Alabama State payroll taxes 2024
In Alabama, payroll taxes are organized into the following categories:
- Alabama Personal Income Tax(PIT)
- Alabama State Unemployment Insurance (UI) Tax
Alabama Personal Income Tax(PIT)
Alabama's state personal income tax rates fluctuate based on both the individual's filing status and their income level. Filing statuses encompass Single, Married Filing Separately, Married Filing Jointly, and Head of Household.
For individuals in Alabama, payroll taxes are structured based on filing status as follows:
For single persons, heads of families, and married individuals filing separate returns:
- 2% tax rate applies to the first $500 of taxable income
- 4% tax rate applies to the next $2,500 of taxable income
- 5% tax rate applies to all taxable income over $3,000
For married couples filing jointly:
- 2% tax rate applies to the first $1,000 of taxable income
- 4% tax rate applies to the next $5,000 of taxable income
- 5% tax rate applies to all taxable income over $6,000
Alabama State Unemployment Insurance (UI) Tax
Alabama introduced the State Unemployment Tax Act (SUTA) to provide support to individuals experiencing unemployment by providing them with unemployment benefits. This legislation enables the state to collect the required funds to administer unemployment insurance benefits to qualified individuals during times of job loss. In 2024, SUTA rates in Alabama spanned from 0.20% to 5.40%, with a consistent taxable wage base of $8,000.
Alabama payroll tax filing
- Report of New hire Employees
- Report of Independent Contractors
- Alabama personal income tax filing(Form 40NR,Form 40)
- Quarterly contribution and wage report(Forms UC-CR-4 and UC-10-R)
Report of New hire Employees
Employers in Alabama are mandated to report each newly hired or recalled employee to the Alabama Department of Labor. This information must be provided within seven days from the date of hire or reemployment. For employers reporting electronically, transmission is permitted twice monthly, with intervals falling between twelve (12) and sixteen (16) days. Failure to report newly hired or recalled workers may result in fines of up to $25 for each violation.
Report of Independent Contractors
Employers in Alabama are not obligated to report each newly hired independent contractor to the Alabama Department of Labor.
How to report employees new hire in Alabama?
In Alabama, there are several options available for submitting new hire information, offering flexibility in the reporting process.
| Online | Fax | |
|---|---|---|
| Employees New Hire Report | Address Information: 649 Monroe St. Room 3205 Montgomery, AL 36131 Public Phone: 334-206-6020 Email: NewHire@labor.alabama.gov | Fax 1: 334-206-6020 |
Alabama personal income tax filing(Form 40NR,Form 40)
Tax Season 2024 is scheduled to commence on January 29, with the filing deadline for individual income tax returns falling on April 15. The forms applicable for Alabama taxpayers in 2023 include the Alabama Individual Income Tax Return - Form 40NR for non-residents and the Alabama Individual Income Tax Return - Residents & Part-Year Residents - Form 40.
Quarterly contribution and wage report(Forms UC-CR-4 and UC-10-R)
Contribution and Wage Reports in Alabama are due on the last day of the month following the end of the quarter.
| Reporting Period | Due Date |
|---|---|
| Quarter 1 | April 30 |
| Quarter 2 | July 31 |
| Quarter 3 | October 31 |
| Quarter 4 | January 31 |
To file a quarterly unemployment compensation report in Alabama, you can use Forms UC-CR-4 and UC-10-R. This can be done either as an individual or as a third-party filer with Power of Attorney (POA) on file with the Department. Alternatively, you can opt for bulk filing as a third-party filer with POA.
Penalty and interest rate for late report
For past due contributions in Alabama, the interest rate is one percent (1%) per month on contributions due until paid. Additionally, regarding late reports, for quarters prior to January 1, 1996, the penalty is $5.00 per report due. Starting from the first quarter of 1996, the penalty is either $25 or 10% of taxes owed, whichever amount is greater.
Processing payroll manually is complex
As a business owner who runs payroll manually, you will need to keep up with ever-changing payroll laws. You already have a lot on your plate and you might not want to get into the complex process of pay stub generation.
With SecurePayStubs' paystub generator, f you can swiftly produce pay stubs for employees and independent contractors, guaranteeing accurate calculations for both federal and Alabama state taxes, all completed within just 2 minutes. Enter the basic employee and employer information, select a pay stub template for free, and let SecurePayStubs calculate the applicable payroll taxes accurately.
Spend less time generating pay stubs and more on your business growth.
This article has been updated from its original publication date of April 8, 2024.