Many employers across California choose to pay employees "under the table". This typically means cash payments at the end of a job or specific pay period. It may seem like a benefit to you as you are often not paying taxes on this money, but the truth is you are likely being underpaid. If you believe your employer is not adequately compensating you for all of the hours you have worked or has withheld overtime and other benefits while paying you "under the table," contact our office to discuss your options.
Is it Illegal for my Employer to pay me Under the Table?
In California, failure to report wages to government agencies is illegal and to pay under the table is often with the intent that both you and your employer are avoiding paying required taxes. As many employees are aware, with each paycheck you see substantial deductions for the following:
- Social Security and Medicare (FICA);
- State and Federal income taxes;
- State Disability Insurance;
- State Unemployment Insurance;
- Workers' Compensation; and
- Employee Benefits.
When your employer fails to pay these taxes when paying you, they are subjecting themselves to severe penalties and potentially causing you to commit fraud to the IRS and Franchise State Tax Boards. Of course, this would not be required if you are an independent contractor. As an independent contractor, it is important to ensure you are not being misclassified when you are really an employee, at the direction and control of your employer. If you have been misclassified, you are entitled to overtime, benefits, meal and rest periods that are not afforded to independent contractors.
Why Would my Employer Pay me Under the Table?
Likely because they can control the amount you earn without worrying about paying you mandatory overtime, providing meal and rest periods or complying with the many stringent Labor requirements in California such as providing accurate itemized wage statements. Although you believe you are getting a good deal because you are not paying taxes, it is likely you are being drastically underpaid such that you are losing money even given taxes.
Labor Code section 226 requires employers to provide accurate itemized wage statements at each pay period. On these statements, your employer must provide the following:
- Gross wages earned;
- Total hours worked;
- Piece rate Earned;
- All deductions;
- Net Wages Earned;
- Pay Period;
- Name of Employee and last four digits of their Social Security Number or Employee Identification number;
- Name and Address of the Employer;
- Your hourly rate or salary amount; and
- as of 2020 and through the date of writing this article, there are additional requirements to display your available Paid Sick Leave balance and COVID-19 Supplemental Paid Sick Leave either on the Wage Statement or a separate writing made available to the employee on 'payday.'.
Where an employer fails to provide these wage statements, they could be accumulating penalties up to $4,000 per employee and the employee is entitled to an award of costs and reasonable attorney's fees when prosecuting these claims.
Under the Table = Unpaid Wages
Where an employer is using under the table pay to avoid paying you overtime or minimum wage, you always have a claim against them whether or not you signed an employment agreement.
In addition to a claim for your unpaid wages, California Labor Code section 218.5 provides that a Plaintiff can recover attorney's fees in “any action for the nonpayment of wages.” Labor Code section 1194 specifically provides for attorney's fees and costs when recovering unpaid overtime or minimum wage compensation, including interest on those wages from the time they were owed until the time they are awarded to you in Court. If an employer has underpaid you with under the table wages, it is possible you can collect from your employer while your attorney collects their fees directly from the employer.
Are all Cash Payments "Under the Table?"
So long as employees make available accurate itemized wage statements, and you are being paid appropriately and provided state mandated benefits, it is not illegal to be paid in cash. It is important to match the cash payment you are receiving with the itemized wage statement to ensure you were paid appropriately. If you believe you are being paid inappropriately contact our attorneys at Miller Wilmers APC, a Los Angeles, California based law firm servicing all of California to help you get what is owed to you.
Salvador Cisneros Reply
Posted Jun 09, 2022 at 14:57:40
Outstanding article thank you for that information.
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