How to Do Payroll in Connecticut
Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects. She uses this extensive experience to answer your questions about payroll.
This article is part of a larger series on How to Do Payroll.
Compared to other states, Connecticut has many pro-worker policies that businesses need to be aware of when processing payroll. Some of the major items include:
- Connecticut has a progressive state income tax that increases along with an employee’s income.
- Connecticut has one of the highest minimum wage rates in the country.
- Connecticut defaults to weekly paychecks, especially for hourly employees; rules may differ for executive, administrative, and professional employees.
- Connecticut is a no-fault mandatory state when it comes to providing workers’ compensation.
Connecticut payroll can get complex. You may find payroll software makes it easier. We recommend payroll software like QuickBooks Payroll. It not only files and pays your payroll taxes but also covers any penalties you are charged if its reps make a mistake—and with the premium plan, it will cover your mistakes too. It lets you pay employees via direct deposit or check, even with same-day payment options. Sign up for a free trial or discounted rate.
Running Payroll in Connecticut—Step-by-Step Instructions
Since our last update: Some of the forms have been updated, and we provide the latest links.
Step 1: Set up your business as an employer. At the federal level, you need your Employer Identification Number (EIN) and an account in the Electronic Federal Tax Payment System (EFTPS).
Step 2: Register with the State of Connecticut. In Connecticut, you will need to register with the Connecticut Department of Revenue Services. To register, you will need to complete the Business Taxes Registration Application online through myconneCT. This will allow you to register for various taxes including withholding tax, sales and use tax, and business entity tax. If you need assistance, the Connecticut Department of Revenue Services provides an FAQ section to assist businesses.
Step 3. Set up your payroll process. You’ll need to set up systems to support your payroll process; this includes selecting a pay schedule and deciding how you’ll pay employees, how you’ll process taxes and deductions, etc.
Step 4: Collect employee payroll forms. The best time to collect payroll forms is during onboarding. Payroll forms include W-4, I-9, and direct deposit authorization information. Connecticut requires you to submit form CT-W4 as well.
Step 5: Collect, review, and approve time sheets. You’ll need to track time for hourly and other nonexempt employees to ensure you pay them for the time they worked. If you’re not using a time and attendance system, downloading one of our free time sheet templates will help you stay organized.
Step 6: Calculate payroll and pay employees. You can process payroll yourself, use an Excel payroll template, or select a payroll service. Each option comes with benefits and drawbacks. Normally you have the option to pay employees in a variety of ways including by cash, check, direct deposit, or pay cards.
Step 7: File payroll taxes with the federal and state governments. The IRS has forms and instructions on filing federal taxes, including unemployment. You can also order official tax forms from the IRS. For Connecticut state taxes, you remit your taxes on either a weekly, monthly, quarterly or annual basis depending on your employer classification. New employers (within the first calendar year of registering in Connecticut) should remit quarterly. Seasonal, household, and agricultural employers have their own schedules. For more information, please see the Connecticut Employer’s Tax Guide.
Please Note: If payday falls on a Saturday, Sunday, Monday, or Tuesday, the due date is the second Wednesday following the payday. For example, if payday falls Tuesday the ninth, the due date is Wed the 17th. If payday falls on a Wednesday, Thursday, or Friday, the due date is the Wednesday following the payday. So if payday falls Friday the fifth, the due date is Wednesday the 10th.
Step 8. Document and store your payroll records. It is important to retain records for all employees for several years (federal law requires three years for payroll documents and four for payroll tax records), including those who are no longer with your company.
Connecticut requires that you maintain the following employee information for three years:
- Name
- Address
- Job
- Daily and weekly hours worked (nearest 15-minute increment)
- Wage rate
- Overtime wages
- Deductions per pay period
- Additional payments per pay period
- Total wages per pay period
- Youth work certificates
In addition, you must keep these records at the place of employment unless you receive an exception from the Connecticut Labor Commissioner.
Step 9. Do year-end payroll tax reports. The federal forms that are required by law are W-2s (for employees) and 1099s (for contractors). These forms should be provided to employees and contractors by Jan. 31 of the following year. State W-2s are also required for Connecticut and these forms are due by Jan. 31 as well.
If you want to learn more about doing payroll, applicable to businesses in all states, please see our general guide on how to do payroll.
Download our free checklist to help you stay on track while you’re working through these steps:
Thank you for downloading!
Connecticut Payroll Laws, Taxes & Regulations
Federal law mandates that you pay income taxes, Social Security, Medicare, and Federal Unemployment Tax Act (FUTA) taxes. Called FICA taxes, Social Security and Medicare are withheld from each employee’s paycheck: Social Security at 6.2% and Medicare at 1.45%. You also have to pay a matching employer’s amount out of your bank account. FUTA is an employer-only tax that is 6% on the first $7,000 paid to each employee in that year.
For the most part, Connecticut payroll laws, taxes, and regulations provide more protection to employees than the federal law—in particular, the lowest-paid employees. Its state income tax is progressive with higher income individuals paying more. Connecticut also has a higher minimum wage, stricter requirements on final pay, and specific rules on paying employees via pay cards.
Since our last update: You’ll find fewer regulations than in past updates. We’ve included only those rules listed under Connecticut state regulations as found in eregulations.ct.gov, the official website for laws in the state of Connecticut.
Want to calculate your employee’s gross pay, plus the FICA and FUTA taxes due?
Use our free calculators below to help you out:
Connecticut Income Taxes
Connecticut has a progressive income tax that taxes an employee’s income at a higher rate as their income goes up, which is similar to the federal income tax guidelines. If you’re not using a payroll provider, you’ll need to use Connecticut’s withholding tax table to determine how much to withhold from each employee’s paycheck.
State Unemployment Tax
Connecticut’s state unemployment tax (SUTA) rate is 3% for new employers. For established employers, the rate is based on your experience rate, which includes how many of your former employees applied for unemployment benefits and the fund balance tax rate, which is based on the solvency of Connecticut’s unemployment fund. In 2022, the rate can be anywhere between 1.9% and 6.8%. The percentages for both new and experienced employers are on the first $15,000 of taxable income per individual employee.
When you pay SUTA on time and in full, you may qualify for up to a 5.4% deduction on your FUTA taxes, potentially taking that rate down to 0.6%.
Workers’ Compensation
In Connecticut, you are required to provide workers’ compensation for all businesses with at least one employee with very few exceptions. These exceptions include employees who work occasionally/as-needed, domestic employers who work at a private home for no more than 26 hours weekly, and corporate executives who decline coverage. Connecticut is also a no-fault state, meaning that workers’ compensation claims can be covered regardless of the reason behind the workplace injury.
Employees are required to report any workplace injury immediately, and the employer/insurer has 28 days to start payment for lost wages or deny the employee’s claim.
The cost of workers’ compensation insurance is around $1.10 for each $100 payroll you processed. For example, a company that processes $500,000 of payroll can expect to pay around $5,500 in insurance.
Minimum Wage & Tips
Most jobs will require you to pay at least minimum wage.
Connecticut’s 2022 minimum wage is $14 per hour for nontipped employees (much higher than the $7.25 federal minimum wage). This is an increase of $1 from the previous minimum wage. State law allows employers in Connecticut to take up to a $7.62 tip credit for hotel and restaurant workers and a $5.77 tip credit for bartenders, which puts the minimum cash wage that has to be paid by employers at $6.38 and $8.23 per hour, respectively.
On June 1, 2023, the minimum wage rate will rise to $15 per hour.
Minimum Wage for Minors (first 90 days)
For the first 200 hours of employment, persons under 18, except for emancipated minors, may receive reduced wages. They cannot be less than 85% of fair wage (including minimum wage) or at least $10.10 per hour for the first 90 days of employment.
Overtime
Connecticut generally follows federal guidelines regarding overtime. You’ll need to pay 1.5 times the regular hourly rate for any hours your employees work over 40 in a workweek.
For help ensuring your overtime calculations are correct, please check out our guide on calculating overtime.
Need help calculating overtime?
Use our free overtime calculator below to help:
Different Ways to Pay Employees
In Connecticut, you are able to pay employees via standard payment options. These options include check, cash, pay cards, or direct deposit. Check out our guide on how to pay employees for more in-depth information.
Since our last update:
The regulations concerning pay cards are no longer listed by the Secretary of State. Read our article for best practices for paying employees with payroll cards.
Minimum Pay Frequency
Connecticut requires that you pay employees at least weekly. Payday cannot come more than eight days after the end of the pay period. Educational institutions may be exempted from this rule if negotiated with employees in a collective bargaining agreement. Executives, administrative, and professional employees may be paid less frequently by agreement.
If you pay an employee solely on commission, they must be paid weekly at least a minimum fair wage for each hour worked. Commissions must be settled monthly.
Pay Stub Laws
Connecticut does not have regulations regarding pay stubs for employees. However, we recommend that you provide statements that include hours worked, gross earnings for regular hours and overtime, itemized deductions, and net pay.
If you’d like to create your own pay statements, then download one of our free pay stub templates. They’re already formatted, so you can print and provide them to employees today.
Paycheck Deduction Rules
Connecticut does not allow you to deduct the following from an employee’s paycheck:
- Shortage of cash
- Lost or damaged possessions of the company
- Equipment, supplies, or uniforms
- Bad checks
You are able to deduct these common items from an employee’s check:
- Taxes
- Garnishments and levies
- Benefits
- Reimbursements
- Apparel supplied for the course of employment; you can deduct up to $1.50 per week or the actual cost for maintenance and laundering
Final Paycheck Laws
Connecticut no longer regulates when a final paycheck must be paid. Best practices, however, dictate that an employee’s last paycheck be paid on the next regularly scheduled payday or sooner.
If you find yourself needing to print a check for a terminated employee as soon as possible, use one of our recommended free ways to print payroll checks online.
Connecticut HR Laws That Affect Payroll
Connecticut has stricter time off requirements than the federal government for many Connecticut employees. It also has stricter laws on youth employment. However, it does not require employers to purchase disability insurance.
Hourly Computations
All time must be reckoned to the nearest unit of 15 minutes.
Connecticut New Hire Reporting
Connecticut requires that you report new hires within 20 days of the hire date. You can report new hires online through the Connecticut Department of Labor’s New Hire Reporting website.
Breaks, Lunches & Time-Off Requirements
Connecticut does not mandate vacation leave. However, all other time-off requirements supersede federal law as they are more advantageous to Connecticut employees. There’s a special sick leave law and new requirements for offering state family leave.
Click through the tabs below to learn what you need to comply with.
State Disability Insurance
There is no state disability program in Connecticut or a requirement for companies to purchase disability insurance. However, it is a good idea to have, both for your employees and yourself.
Child Labor Laws
Connecticut restricts the work hours of 16- and 17-year-olds. The rules are broken down by industry, school enrollment, and whether school is in session. In general, youth enrolled in school can only work under these guidelines when school is in session:
- Between the hours of 6 a.m.–10 p.m. (11 p.m. for some industries on non-school nights)
- A maximum of six hours per day (eight hours Friday, Saturday, Sunday)
- A maximum of 32 hours per week
When school is not in session, they can work:
- No more than eight hours a day
- No more than six days in a week
For youth who are not enrolled in school, they can work a maximum of six days in a week and 48 total hours.
Federal child labor laws restrict 14- and 15-year-olds from working more than 18 hours per week (three hours per day) when they’re in school and no more than 40 hours per week (eight hours per day) when school is out. In addition, they can only work between 7 a.m. and 7 p.m.
No minor is allowed to perform hazardous work such as mining.
For exceptions and more detail regarding your industry, please visit the Employment of Minors section on the Connecticut Department of Labor’s website.
Check out our guide to hiring minors for more insight into federal regulations.
Payroll Forms
Listed below are some federal and state forms needed to produce accurate pay for employees and compliant payroll reporting and tax remittance for businesses.
Connecticut Payroll Forms
- Connecticut W-4 Form (CT-W4): To help employers on calculating tax withholding for employees
- Connecticut Quarterly Reconciliation of Withholding (CT-941): for quarterly tax filing
- Connecticut W-3 form (CT-W3): for annual reconciliation of withholding
Federal Payroll Forms
- W-4 Form: Assists employers calculate withholding tax for employees
- W-2 Form: Reports total yearly wages earned (one per employee)
- W-3 Form: Reports total yearly wages and taxes for all employees
- Form 940: Calculates and reports unemployment taxes due to the IRS
- Form 941: Files quarterly income and FICA tax withholding
- Form 944: Reports annual income and FICA tax withholding
- 1099 Forms: Provides contractors with pay information and amounts that assist them in tax calculation
Connecticut Payroll Tax Resources & Sources
- myconneCT: Register, submit and file forms, and make payments, beginning in September 2021.
- Connecticut Workers’ Compensation Commission: Find information pertaining to workers’ compensation requirements. It is also a place to refer employees for a step-by-step guide on what they need to do if they suffer an on-the-job injury.
- Connecticut New Hire Reporting: Complete new hire reporting and view FAQs relating to new hire compliance.
- Connecticut Department of Labor: Obtain information relating to the calculation of unemployment taxes, as well as other laws and regulations relating to the welfare and protection of employees.
- Connecticut Department of Revenue Services: Information on withholding tax, registering your business, forms, and more.
To learn more about payroll laws, check out our payroll compliance guide.
Bottom Line
Connecticut payroll differs from other states by the way it structures state income taxes, minimum wage, workers’ compensation requirements, timing on when employees should be paid, and child labor rules. Be sure to follow deadlines by federal and state governments.
