Operational Gaze:
How to Run Payroll in Oklahoma?

April 11th 2024

Employers in Oklahoma need to follow specific rules when paying their workers, like calculating what they earn, deducting what’s needed, and sticking to tax laws. It’s crucial for employers to understand these rules and stay updated on Oklahoma’s work and tax laws to manage payroll well.

This article gives a step-by-step guide made for Oklahoma businesses. It’s meant to help handle pay periods smoothly by explaining how to do payroll while following the law. The guide’s goal is to make payroll easier for Oklahoma businesses by giving them advice and instructions to ensure they’re doing things right according to the law.

This Article Covers

Laws That Affect Payroll Procedures in Oklahoma
Worker Classifications in Oklahoma
Payroll Forms and Relevant Bodies in Oklahoma
Applicable Taxes in Oklahoma
Key Pay Elements That Impact Payroll in Oklahoma
Step-by-Step Guide to Payroll in Oklahoma

Laws That Affect Payroll Procedures in Oklahoma

Oklahoma Laws

  • Oklahoma Code: Employment rules in Oklahoma are defined by the Oklahoma Labor Statutes. These laws cover a wide range of work aspects, like how employees are paid, guidelines for time off, workers’ compensation, and more.
  • Overtime Pay: In Oklahoma, certain workers are entitled to extra pay if they work more than 40 hours a week. This additional payment, known as overtime, is usually set at one and a half times their regular hourly wage.
  • Breaks and Meal Times: Employers in Oklahoma aren’t obligated by law to offer paid breaks or meals. Yet, many employers do give short, usually paid, breaks lasting around 20 minutes. Under federal law, employers are required to provide reasonable break time for a salaried employee to feed breast milk for her nursing child for one year after the child has been born.
  • Unemployment, Disability, and Workers’ Coverage: Oklahoma employers must participate in the state’s unemployment insurance program. While disability insurance isn’t obligatory, some employers might offer it voluntarily. Workers’ compensation, however, is a must. It ensures employees are covered if they get hurt or ill due to their job.
  • Minimum Pay: The least amount employees can be paid per hour in Oklahoma stands at $7.25. Staying updated on any changes in the state’s minimum wage is crucial, as it may vary over time.
  • Paid Time Off and Leaves: Typically, Oklahoma’s work laws don’t mandate employers to provide paid time off, like sick leave, holiday leave, time off for jury duty, voting leave, or bereavement leave. However, some federal laws, such as the Family and Medical Leave Act (FMLA), might allow eligible employees to take unpaid leave for specific reasons.
  • Payment Records: Employers in Oklahoma must furnish employees with pay stubs or wage statements. These documents should display how much they’ve earned, deductions made, and other important details. The frequency of issuing these pay stubs may differ but is often done with each paycheck or at least twice a month.
  • Final Pay: When a job concludes in Oklahoma, employees have the right to receive their last paycheck, which should include any outstanding wages.

Federal Laws

  • The Fair Labor Standards Act (FLSA): FLSA holds a crucial role in setting important rules covering minimum wage, overtime pay, keeping records, deciding exemptions, and rules about child labor across different industries. These rules aren’t just for private businesses; they also apply to federal, state, and local government bodies.
  • The Federal Insurance Contributions Act (FICA): FICA requires both employers and employees to contribute to Social Security and Medicare. Employers need to take out 6.2% for Social Security tax and 1.45% for Medicare tax from each employee’s pay. On top of that, employers have to match these deductions, making a total FICA payroll tax rate of 15.3% for each worker.
  • The Federal Unemployment Tax Act (FUTA): FUTA mandates that employers chip in for unemployment taxes, which help provide benefits to qualified employees who lose their jobs. Even though it doesn’t directly affect employees’ paychecks since it’s an obligation for employers, FUTA contributions must be properly noted in every payroll cycle. Usually, a 6% tax on the first $7,000 paid to an employee yearly is expected, although there might be exceptions depending on the industry.

HR Laws

  • New Hire Reporting in Oklahoma: Employers in Oklahoma have specific rules when hiring new employees. Within 20 days of hiring, rehiring, or recalling an employee, it’s vital for employers to notify the Oklahoma New Hire Reporting Center. This notification must contain essential details like the employee’s full name, address, social security number, the employer’s name, and the Federal Tax ID number.
  • Posting Requirements in Oklahoma: The Oklahoma Department of Labor mandates that all businesses employing individuals in the state adhere to certain rules regarding workplace posters. Employers must display labor law posters in their workplace. These posters convey vital information about employee rights and employer responsibilities according to Oklahoma labor laws. They cover topics such as minimum wage regulations, workplace safety guidelines, and other laws applicable to businesses in Oklahoma.

Worker Classifications in Oklahoma

Employees and Independent Contractors

In Oklahoma, folks who work for a company usually have set schedules, work under supervision, and use the company’s tools. Employers take out taxes from their paychecks and provide benefits like workers’ comp and insurance.

On the other hand, independent workers in Oklahoma have more freedom. They’re hired for specific jobs, use their own tools, and handle their own taxes. They don’t get benefits like workers’ comp or company-provided health plans. To figure out who’s who, Oklahoma uses a classification test from the IRS called the 20-factor test.

IRS 20-factor test

In Oklahoma, a worker is seen as an employee under the Employee Classification Act if they meet at least 10 out of the 20 conditions under the 20-factor test. The conditions include some of the following: 

  • Contractors decide when and how they work.
  • Employees usually get training, but contractors already know their job.
  • Contractors can hire helpers.
  • Contractors often get paid for a job, while employees get hourly pay.
  • Employers give tools to employees, but contractors use their own.
  • Contractors run their own business, can make money or lose it, and work for different companies.
  • Employees can leave or get fired without big consequences, but contractors can only be let go for breaking their contract.

If a sole proprietorship or partnership doesn’t meet these conditions, they’re considered individual contractors. Subcontractors and lower-tier contractors must also follow the Employee Classification Act’s rules. To know more about the rights of salaried and hourly employees, you can read our guides on your rights as a salaried employee in Oklahoma, and your rights as an hourly employee in Oklahoma.

Payroll Forms and Relevant Bodies in Oklahoma

Oklahoma Payroll Forms

  • Form OK-W-4: Oklahoma employees use this form to specify the allowances for state income tax withholding to their employers.
  • Form WTH-10001:  The Oklahoma Quarterly Wage Withholding Tax Return is a form used by employers in Oklahoma to report and remit state income tax withholdings on a quarterly basis to the Oklahoma Tax Commission. 
  • Form 511: Oklahoma residents use this form to file their state income tax returns.
  • Form OW-9: This form is used by qualifying military spouses in Oklahoma to claim an exemption from state income tax withholding on their wages. This form allows eligible spouses of military service members, whose spouses are members of the Armed Forces on active duty and have been relocated due to military orders, to declare their exemption from Oklahoma state income tax withholding for the tax year.

Federal Payroll Forms

  • W-4 Form: This official paper authorizes employers to accurately figure out the amount of tax to be taken out from their workers’ paychecks.
  • W-2 Form: Provides a complete summary of how much each individual employee earned in a year.
  • W-3 Form: Summarizes all employees’ compensation and tax details in a brief and condensed way.
  • Form 940: Sends a thorough report to the IRS detailing the unemployment taxes that are due.
  • Form 941: Used every quarter, this form reports the earnings and FICA tax deductions from employees’ salaries.
  • Form 944: Submits an annual report giving specific information on earnings and FICA tax withholdings from employees’ salaries.
  • 1099 Forms: These formal papers are utilized to officially report yearly earnings and FICA tax withholdings from employees’ salaries.

Federal and Oklahoma Payroll/ Tax Bodies

  • Internal Revenue Service (IRS): The IRS, a federal agency, is responsible for collecting federal taxes and ensuring compliance with tax laws. It manages various taxes like income tax withholding, Social Security, Medicare, and federal unemployment taxes (FUTA), playing a vital role in the nation’s tax system.
  • Oklahoma Tax Commission (OTC): The OTC oversees state taxes within Oklahoma, including income tax withholding, unemployment insurance tax, and other state-specific taxes. It serves as the state’s authority for tax administration and revenue collection.
  • Social Security Administration (SSA): The SSA manages Social Security programs, including the collection of Social Security taxes (FICA). These taxes fund retirement, disability, and survivor benefits for eligible individuals.
  • Oklahoma Employment Security Commission (OESC): The OESC administers Oklahoma’s unemployment insurance program. It collects unemployment taxes from employers, providing financial assistance to qualified individuals who are unemployed through no fault of their own.
  • Department of Labor (DOL): The DOL, both at the federal and state levels, oversees labor laws and regulations. It ensures compliance with minimum wage standards, overtime pay, workplace safety, and other employment-related laws to protect workers’ rights and promote fair labor practices.

Applicable Taxes in Oklahoma

Employer Contributions

Federal Unemployment Tax Act (FUTA): Oklahoma adheres to the Federal Unemployment Tax Act (FUTA), which establishes a federal rate, currently set at 6.0%, applicable to the initial $7,000 of wages for each employee.

Withheld from Employee’s Wages

  • Oklahoma State Income Taxes: Oklahoma imposes state income taxes on individuals and businesses. The state operates on a gradual income tax rate that ranges from 0.25 percent to 4.75.
  • Workers’ Compensation in Oklahoma: Within Oklahoma, employers are legally mandated to furnish workers’ compensation coverage for their workforce. This ensures that employees who suffer injuries or illnesses due to their job receive compensation for medical expenses and disability benefits. In cases of work-related fatalities, the benefits from workers’ compensation extend to the deceased employee’s dependents.
  • Social Security (FICA) Withholding: Employers in Oklahoma must comply with the Federal Insurance Contributions Act (FICA). This necessitates deducting Social Security and Medicare funds from employees’ wages. Employers are also obligated to match the same amount for Social Security and Medicare. Specifically, regarding the additional Medicare tax, employers only subtract the portion due from the employee without an obligation to match it themselves.

Key Pay Elements That Impact Payroll in Oklahoma

Minimum Wage

The current minimum wage in Oklahoma stands at $7.25 per hour for employees. Employers are strictly prohibited from using tips to satisfy the minimum hourly wage obligation. Given the potential for amendments in wage laws, employers should remain vigilant and keep abreast of any alterations to these regulations.


In adherence to the federal Fair Labor Standards Act (FLSA), Oklahoma abides by its directives concerning overtime. Employees who exceed 40 hours of work in a workweek must receive compensation at a rate of 1.5 times their regular hourly wage. With Oklahoma’s minimum wage fixed at $7.25, this results in an overtime rate of $10.88 per hour. Employers need to ensure compliance with these regulations to avoid penalties for breaking Oklahoma Labor Laws.

Workers’ Compensation Insurance

Oklahoma enforces a statutory requirement that mandates employers with a workforce of two or more individuals to provide workers’ compensation coverage. However, specific specialized job roles might be exempt from this stipulation. Alternatively, employers can opt to apply for self-insurance through the Oklahoma Workers’ Compensation Commission, granting them the authority to directly handle workers’ compensation claims.

Pay Stub Laws

Oklahoma mandates employers to furnish employees with a comprehensive pay statement during each pay period. This detailed statement should encompass various aspects, including the duration of the employee’s work, earnings, and any payments received. Moreover, it should delineate regular and overtime hours worked, hourly wage, total earnings, tax deductions, and authorized deductions. The pay stub must also distinctly display the commencement and conclusion dates of the pay period, ensuring transparency in compensation.

Wage Garnishment

Oklahoma’s wage garnishment laws align with federal guidelines and provide protective measures for employees. Terminating an employee solely due to wage garnishment is prohibited, except in cases involving multiple garnishments. Creditors are obliged to furnish debtors with prior notice before initiating wage garnishment, and debtors retain the right to dispute the debt or request a hearing. Oklahoma’s state laws define the hierarchy for addressing various types of debts and delineate the process for wage garnishment, ensuring fairness and due process for all involved parties.

Final Paycheck

Upon the termination of employment, employees in Oklahoma must receive full payment for the wages they’ve earned until the termination date. If you’re let go from your job, your employer must issue your final wages within three days from your usual payday. For instance, if you lose your job on the 20th, but your next scheduled payday falls on the 31st, you’ll have to wait until then to receive your paycheck. If your employer doesn’t pay you on time, you have the option to submit a Wage Claim with the Oklahoma Department of Labor. However, before filing a claim, it’s necessary to request your final wages from your employer.

Step-by-Step Guide to Payroll in Oklahoma

  • Understanding Payroll Regulations in Oklahoma: Before embarking on payroll procedures in Oklahoma, it’s essential to grasp the regulations that govern your specific business. These laws can vary based on your industry, the size of your employee base, and how your workers are categorized. Take the time to familiarize yourself with both the state-specific labor laws in Oklahoma and the federal payroll regulations that directly impact your business operations.
  • Registering Your Business as an Employer with the IRS: This step involves obtaining an Employer Identification Number (EIN) and establishing an account within the Electronic Federal Tax Payment System (EFTPS). For new businesses, securing an EIN is a primary step before initiating any payroll processes. An EIN is a unique nine-digit number assigned by the IRS to track a company’s tax-related activities. Application for an EIN can be completed conveniently online using Form SS-4.
  • State Registration in Oklahoma: If your business operates within the state boundaries of Oklahoma, it’s mandatory to register it with the authorities. New ventures can accomplish this through the official website of the State of Oklahoma. Additionally, any business compensating employees within Oklahoma must complete the registration process with the Oklahoma Tax Commission.
  • Determining Employee Classification: Properly categorizing your workforce as either employees or independent contractors holds significant importance, as it profoundly impacts tax and wage reporting. Incorrect classification can lead to legal repercussions and financial penalties. Using the Common Law Test as a guideline can help in making accurate determinations.
  • Collecting Employee Payroll Forms: During the onboarding process for employees in Oklahoma, ensure the collection of essential forms. Employees should complete the I-9 verification and the state’s version of the W-4, known as the Employee’s Withholding Tax Exemption Certificate.
  • Tracking Time and Attendance: Implement a reliable system to monitor employee work hours and attendance accurately. This system should encompass various aspects, including workweek delineations, overtime calculations, break periods, and leave. Leveraging digital tools like time and attendance software can significantly enhance accuracy and efficiency.
  • Establishing a Payroll Cycle: Enact consistent pay periods and ensure that employee paychecks align with state regulations within these stipulated periods.
  • Filing Federal Payroll Taxes: Adhere meticulously to IRS guidelines concerning federal taxes, encompassing aspects such as unemployment tax. Depositing employment taxes on the assigned schedule, either monthly or semiweekly as determined by the IRS, is crucial.
  • Maintaining and Archiving Payroll Records: Maintain meticulous records for all employees, even for past personnel, for an extended duration in accordance with federal regulations.
  • Processing Annual Payroll Reports: Compile annual payroll reports, encompassing W-2 Forms and 1099 Forms. Furnish these forms to employees no later than January 31 of the subsequent year. This ensures compliance with reporting and regulatory obligations.

Final Thoughts

Navigating payroll in Oklahoma involves its intricacies, but with a systematic approach, it becomes a manageable task. Understanding the specific regulations applicable to your business, establishing an efficient payroll system, and ensuring compliance with both federal and state laws are crucial steps toward accurately and punctually compensating your employees.

For those seeking to streamline their processes, explore our recommended list of the top 6 payroll apps for US businesses. Alternatively, if you already have a system in place, we offer 10 valuable tips to optimize your payroll procedures in the US.

Important Cautionary Note

When making this guide, we have tried to make it accurate, but we do not give any guarantee that the information provided is correct or up-to-date. We therefore strongly advise you to seek advice from qualified professionals before acting on any information provided in this guide. We do not accept any liability for any damages or risks incurred for the use of this guide.