Achieving Pay Stub Compliance in Hospitality Payroll Management

Timothy Lozier Blog, Compliance, NY Wage Theft Prevention Act [WTPA], Restaurants, Tip Reporting Leave a Comment

As the market drives towards more transparency in employment wage protection and visibility, both State and Federal agencies are looking to drive more legislation on employer’s ability to communicate wage rates with their employees.  In New York, the Wage Theft Protection Act (WTPA) has been driving for Pay Stub Compliance, which is creating challenges for companies in their Payroll Management operations.


What is Pay Stub Compliance?


With a focus on transparency, the WTPA Pay Stub Compliance is a directive to provide additional details on an employee’s pay Stub that clearly outlines the various elements that make up the total gross to net pay.  While an important initiative for communicating clearly on the wages and deductions that make up the wage, this is proving a challenge for businesses in the hospitality industry, NY state in particular.  The challenge isn’t in the concept of providing this detail, it is the mechanics on how an employer can complete this using their current Payroll Management System.


Payroll Management System Challenges to Meet Pay Stub Compliance


There are many complexities surrounding the ability to display the necessary deductions and wage rates, simply because the hospitality industry – especially in restaurants – have multiple payroll management differences from other markets.  These differences make the concept of Pay Stub Compliance difficult to achieve.  Some of the key challenges include:


  • Blended Rates: An employee may work Front of House (FOH) and Back of House (BOH) during a given work week.  The Fair Labor Standards Act (FLSA) require that all hours worked performed at two or more rates, overtime must be paid out at a blended overtime rate. These are typically two separate pay rates, and without the ability to discern between the two in a Payroll Management Solution, this can be a manual process to determine the appropriate overtime premium rate the employee should be paid.
  • Meal Allowances and Credits: Many organizations will provide a meal credit or allowance for staff, depending on their shift and their time worked.  This is a deduction that needs to be shown on the pay stub in order to remain compliant.
  • Tip Credits and Tip Pooling: One of the biggest challenges is the ability to calculate minimum wage while having a tip credit applied to their pay rate.  Whether a company decides to institute tip credits per wage rate, or creates a tip pooling program within their business, the calculations behind tip management and the ability to accurately display this information can be a challenge.
  • Overtime Rates: Companies that have employees incurring overtime not only must follow the guidelines on overtime pay rates, but also must accurately display what the overtime hours are, the overtime rate, and factor this – in detail – on the employees pay stub.
  • Tax Deductions: In order to comply with the WTPA and the IRS, the tax deduction must not only be accurate based on the pay rate, shift, tips, and other factors – it must also clearly be displayed on the pay stub in compliance with their time worked.  Again – in a simple industry this may not be a challenge, but in hospitality this is a challenge, and one that without the proper visibility and automation can be difficult.
  • Benefits and other Deductions: Whether a company offers any other programs, such as benefits, transit cards, 401K or other deductions, they must be displayed on the pay stub – in detail.



Pay Stub Compliance Whitepaper


The Solution to Achieving Pay Stub Compliance in Payroll Management


Recognizing the complexity and needs that the hospitality industry is facing, Valiant Solutions has worked diligently to develop a solution to provide the industry with a payroll management system that enables organizations to process error-proof payroll, tie to POS systems and reduce manual efforts in processing.  Now, Valiant has incorporated Pay Stub Compliance into the payroll management system, enabling organizations to meet (and exceed) the requirements of the WTPA.


“We’ve seen many requests from our clients and the market on the notion of pay stub compliance”, says Brenda Casanas, Implementation Manager at Valiant Solutions, based in Woodbury, NY.   “The complexity of the hospitality industry in terms of wage rates, coupled with the inability of a solution to help them stay compliant has held many businesses back in their method of providing pay stubs that meet NY WTPA requirements.”


Brenda goes on to say that, while Payroll Management Solutions certainly help to mitigate risk of control over payroll and regulatory compliance, many are still struggling to provide the level of detail required.  “As far as I know, there is only one solution in the market that is currently providing a true answer to meeting – and exceeding – the requirements of pay stub compliance.  And that is Valiant Solutions.”


Learn more about Valiant’s Payroll Management System with Pay Stub Compliance


To learn more, Valiant has a detailed paper on the risks of not complying, and the ways in which they can provide an organization with proper payroll that is compliant to the NY State rules and regulations.  Companies looking to learn more can visit as well.

Leave a Reply