No, it is not necessarily against the law for employers to pay in cash. However, there are strict regulations that employers must follow when they pay their workers in cash. Under California Labor Code 226, employers must provide a paystub or statement that shows the gross wages paid, total number of work hours, any deductions, total net wages, the dates of the pay period, and other important information. Essentially, this is the same information you would get from an employer if you receive a paycheck or direct deposit into your bank account.
When employers fail to provide such information with each cash payment, this is considered “paying off the books,” which is illegal. If your employer insists on paying you off the books, you have the option of filing an employment rights violation claim, and possibly, a lawsuit.
It’s estimated that 1 in every 6 workers in California is paid in cash, particularly those working in construction. Employers do this to avoid paying taxes and to save money that would normally go towards a payroll administrator / service. Unfortunately, employees are left holding the bag when they face tax consequences and other legal issues based on their employer’s conduct. Many employees that are paid in cash also face other unlawful treatment at their job, like unpaid overtime and not getting days off that they are legally entitled to.
As a victim of illegal cash payments by your employer, we invite you to contact our law firm and learn about your rights and legal options.
Legal Requirements for Paying Employees in Cash
There is no denying that not reporting payments and deductions to the IRS is the number one reason why employers choose to pay in cash. Per federal regulations, employers must report all earned and paid wages to the Internal Revenue Service. Employers must also pay unemployment taxes according to the Federal Unemployment Tax Act (FUTA). Please note that federal unemployment tax is paid by the employer, not the employee, so you as the worker should not have this payment deducted from your wages.
If an employer fails to take the required actions when paying an employee in cash, the employer can be fined up to $100 for each instance of a paycheck / unreported wages violation. Aside from IRS regulations, not having an accurate record of your earnings can also compromise your right to workers’ compensation and state unemployment benefits. In short, being paid under the table comes with heavy consequences that can complicate your life for many years into the future.
How Illegal Cash Payments Impact Your Rights
As we mentioned before, being paid in cash can put you at risk of serious legal issues when it comes to your right to unemployment benefits. Because of California at-will employment laws, it’s possible to lose your job at any point, even if you have a satisfactory work record. To apply for unemployment insurance (UI), you must have proof of your earnings within a certain range of time prior to filing your claim. So, if your employer has an accurate record of your earnings, it will be extremely difficult to obtain unemployment benefits.
We also have to think about what will happen when tax season arrives. A major concern has to do with accurate tax reporting when you do not have paystubs, a W2, or some other tax document? Then again, if your employer did not take out and report the appropriate deductions, you have much bigger problems on your hands then not having the right documents.
You should not have to deal with these problems on your own when your employer has refused to obey the laws and provide you with proof of your earnings and deductions. Our employment lawyers can help you file a wage and hour violation claim against your employer, so please contact us today.
How to Take Legal Action if Your Employer is Paying You under the Table
So, as an employee that is being paid under the table, what can you do to protect yourself and report your employer’s conduct to the proper authorities? One option you have is to file a wage claim with the California Labor Commissioner’s Office. You should contact a lawyer to help you as soon as possible, as proving illegal conduct by your employer can be very challenging. If your employer’s illegal cash payments involve multiple employees, an employment lawyer can also help you file a class action lawsuit.
We understand that filing a complaint or lawsuit against your employer is a huge decision, and going through with a legal case is completely up to you. But you cannot make an informed decision without counsel from an experienced wage and hour attorney. With that in mind, please schedule a free case review by contacting California Labor Law Employment Attorneys Group.
Can I File a Lawsuit for My Employer Paying Me Under the Table?
As previously mentioned, you can file a complaint for wages paid under the table by contacting the California Labor Commissioner’s Office. Is this the only option if your employer refuses to provide paystubs or some other proof of what you earned and the amounts that were deducted? Or, can you file a lawsuit and demand compensation from your employer?
Yes, it’s possible to sue your employer for not providing you with the required documentation when paying in cash. As a result, you suffered monetary losses, which you can attempt to recover from a lawsuit. In order to qualify for a lawsuit, you must show that your employer violated the terms of California Labor Code Section 226 or another state or federal law. In addition, you must start the legal process by filing a claim with the state Labor Commissioner’s Office. If the agency rules in your favor and your employer refuses to pay the judgement, you can file a lawsuit with the civil courts.
Free Legal Services from an Employment Attorney
If you would like to explore the option of suing your employer for paying you under the table, don’t hesitate to contact the legal team of California Labor Law Employment Attorneys Group. We are happy to provide you with a free case review, along with free legal services for the entire duration of your case.
With the Zero Fee Guarantee, we agree to charge you $0 and only accept payment once your settlement is recovered from the party at fault. That means you do not have to worry about the cost of hiring a lawyer that specializes in cash payments and other wage violations. Even more important, you will not be charged for any legal fees if we fail to bring you compensation.
To discuss your experience with an employment rights lawyer in Los Angeles, please get in touch with at your earliest opportunity.
