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New law puts curbs on Social Security numbers on paychecks

by on
in Small Business Tax,Small Business Tax Deduction Strategies

Q. We’ve heard that a new law changes how we use Social Security numbers in the workplace. Is that true?

A. Yes. California employers will soon be required to limit the use of Social Security numbers (SSNs) on paychecks. Effective Jan. 1, 2008, only the last four digits of an SSN or other personal identification number may appear on paychecks.

Make sure your payroll system can accommodate this change.

The new law is part of a larger effort to curtail identity theft. Because employees may leave their pay stubs in open view or even throw them in the trash without first shredding them, pay stubs are a particularly desirable commodity among the identity theft crowd. If you think about it, a paycheck may provide name, address and SSN—just about every detail a thief needs to open a fraudulent credit account.

By removing most of the SSN from the stub, thieves are left without the most valuable data.

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