Can My Employer Pay Me in Cash?Picture this scenario: You are recently hired for a new job. You fill out your new hire forms, and your boss approaches you about your form of payment, stating they would prefer to pay you in cash. You hesitate for a second, thinking of how badly you need the job, but not sure if whether being paid in cash can harm you in any way. What should you say? Under California law, it is not illegal to pay employees in cash. However, it is against the law to pay employees “under the table,” generally meaning paying in cash with an intent to avoid payroll taxes. This could lead to a multitude of consequences, including permitting an employer to take advantage of workers by not paying them properly or for all recorded hours worked. If your employer wants to pay you in cash, there are certain things you should know — including your legal rights and obligations as an employee. For more information, or to schedule a free consultation, contact a skilled employment attorney today.
Is It Illegal to Be Paid in Cash in California?California law does not specify the method by which employees must be paid. This means that an employer can choose to pay via a business check, cash, personal check, or even electronically. However, regardless of the method chosen, employers must still comply with other aspects of the law. The California Labor Code requires employers to provide certain information to employees, typically in the form of a pay stub, each time that an employee is paid wages. This requires:
- Gross wages earned;
- Total hours worked (for non-exempt/hourly employees);
- The number of piece-rate units earned, where applicable;
- All deductions;
- Net wages earned;
- The dates of the pay period;
- The name of the employee and the last 4 digits of their Social Security number;
- The name and address of the employer; and
- The hourly rate.
Jackson works as a truck driver for a company that does commercial renovations. He typically works 10 to 12-hour days, 5 to 6 days a week — regularly working 50 to 65 hours a week. His boss pays him in cash, without a wage statement, so it is hard to keep track of what he is paid and if he is getting paid correctly. One day, Jackson decides to sit down and figure out how much he has made for the year using his time sheets and records of bank deposits. He discovers that his boss hasn’t ever paid time-and-a-half (overtime) for weeks that he has worked more than 40 hours, and that his boss routinely shaves hours off of his pay each week. Without a wage statement, it may be hard for him to prove that his boss is violating both federal and state wage and hour laws.While there may be good reasons for an employer to pay you in cash, be sure that before you agree to this arrangement you will still receive a pay statement as required by California law. If your boss refuses to provide you with this type of statement, it may be time to look for a new job — or to call a lawyer.
What Can I Do If My Employer Is Paying Me Under The Table?Some employers pay wages in cash as a way to avoid their tax obligations, which is why receiving pay stubs from your employer is extremely important. First, it demonstrates that your employer is making the appropriate deductions for unemployment, payroll taxes, and other items. Second, it is a way to ensure that your employer is paying you properly, and third, pay stubs may serve as evidence if you are being paid less than minimum wage or your employer is committing other wage and hour violations. Employers may attempt to justify their actions for reasons such as, “being paid in cash allows employees to earn more money,” “that it is common practice in their industry,” or that “it makes it easier to run their business.” In California, paying employees in cash is incredibly common, with an estimated 1 in 6 employees being paid under the table. However, no matter what the rationale may be, it is illegal for your boss to pay you in cash without complying with other California requirements. Although it may seem like a good idea at first, it can lead to significant consequences, including:
- Delay or denial of an unemployment claim;
- Income tax consequences for failure to report wages;
- May not qualify for workers’ compensation benefits;
- Harder to be approved for Social Security disability benefits without credit for your work; and
- Makes it difficult to verify your earnings.