Is it illegal to get paid under the table

Working under the table in California is illegal. This can lead to unexpected liabilities, including significant penalties and interest for unreported income. Cash payments under the table for the purpose of creating unreported employment are illegal and could result in prison time.

By Brad Nakase, Attorney

Email  |  Call (888) 600-8654

Have a quick question? I answered nearly 1500 FAQs.

Working Under the Table: Consequences and Legal Risks

Is It Illegal to Not Pay Taxes?

When employees are paid under the table, their benefits may be delayed or denied when filing for unemployment insurance (UI) or state disability insurance (SDI). Additionally, they may face audits for unreported wages and will not have check stubs, a Wage and Withholding Statement (Form W-2), or a way to verify their earnings. Working under the table creates significant tax issues and unfair burdens on compliant taxpayers.

Is It Illegal to Pay Under the Table?

Paying employees under the table is illegal and may result in substantial penalties, interest charges, and potential criminal prosecution. This practice may result in a large unplanned liability, including substantial penalty and interest charges for failing to comply with reporting requirements. Employers and employees both risk serious financial and legal consequences. For instance, an audited employer who cannot produce proper payroll records could face significantly higher tax liabilities and penalties compared to one who reports wages correctly. Is paying under the table illegal? The unequivocal answer is yes.

What is Under the Table Money?

“Under the table” means paying wages to employees by cash, check, or other compensation with the intent to evade paying payroll taxes. Paying under the table money results in evasion of obligations to state and federal agencies, making it a legal risk for all parties involved.

Who Benefits More From Being Paid in Cash: Employer or Employee?

Some employers pay cash under the table to avoid their employer tax obligation. They don’t want to contribute taxes or sign up for workers’ compensation insurance. Another reason employers pay cash under the table is so they can hire workers who are unauthorized to work in the United States. Other employers don’t want to deal with recordkeeping. However, whether an employer or employee benefits more from cash payments is complex, as both risk significant penalties.

Is Working Under the Table Legal?

Employers are required to deposit and withhold a variety of employment taxes, regardless of whether employees are paid in cash or by other means, such as direct deposit. Employers can use Form W-4 (Employee’s Withholding Allowance Certificate) to determine how much tax should be withheld. By paying employees under the table, employers effectively avoid paying taxes. Is working under the table legal? In nearly all cases, it violates state and federal laws.

Is It Illegal to Get Paid Under the Table?

Employees receiving under-the-table payments may encounter numerous issues, including unpaid wages, delayed payments, and lack of benefits like Social Security and Medicare. Employees are required to report all wages to the IRS, including cash payments. Failure to do so constitutes a federal offense. Is it illegal to get paid under the table? For employees, it is not necessarily illegal, but failure to report such income is.

I Get Paid Under the Table: How Do I Show Proof of Income?

Proof of income is vital for various reasons, such as securing housing, loans, or insurance. Employees lacking documented earnings may face challenges in these areas. Furthermore, years of unreported wages can negatively affect future Social Security and retirement benefits. If an employer is audited, the employee may become entangled in tax investigations. When asking “How to report cash income?”, maintaining detailed personal records is essential.

Are Under the Table Jobs Illegal?

California law mandates that employers report all wages and withhold applicable taxes, including UI, SDI, federal and state income taxes, and FICA contributions. Employers who fail to comply may face severe penalties under both state and federal law. Are under the table jobs illegal? In California, this type of employment is unequivocally against the law.

Risks of Cash Payments

What happens when employees are paid cash for working under the table? Cash payments under the table for the purpose of creating unreported employment are illegal and could result in prison time. An employee is required to report all wages to the IRS, including those that are paid in cash. Working under the table for cash is commonly associated with jobs such as babysitting, yard work, or bartending. Businesses dealing heavily in cash transactions are especially scrutinized.

Can You Pay Employees Cash?

Employers engaging in this practice risk criminal charges, loss of benefits eligibility, and financial penalties. The IRS employs sophisticated tools to identify irregularities, placing cash-intensive businesses under scrutiny. While employers can pay in cash, they must comply with all applicable employment laws, making “Is it legal to pay employees in cash?” dependent on tax compliance.

Is Paying Under the Table Illegal? Legal Considerations and Consequences

Is It Illegal Not to File Taxes?

When employees are getting paid under the table, taxes aren’t withheld from their wages. Employers paying cash under the table do not comply with employment laws. The IRS can audit your business to learn if you have been skipping out on paying employment taxes. If you don’t have records showing how much you paid employees and withheld, you will be penalized. Is it illegal not to file taxes? The consequences are severe, ranging from penalties to criminal charges.

Is It Legal to Pay Employees in Cash?

Reporting Requirements for Under the Table Pay

In California, a government agency must be notified of wages being paid. Failure to do so is illegal. Your employer may be avoiding taxes and more by paying you “under the table.” They must pay their fair share of everything listed below through withholdings from your cash payments:

  • Overtime compensation
  • Workers’ Compensation
  • SUI (state unemployment insurance)
  • SDI (state disability insurance)
  • FUTA (unemployment insurance)
  • Federal and state income taxes
  • FICA (Social Security and Medicare)
  • Various other employment benefits

Under the Table Employee Rights

When making cash payments, all employment laws must be complied with by an employer. To discuss your employment rights, contact a qualified attorney. Employees wondering “Is it illegal to be paid under the table?” should know their rights under labor laws.

How to Report Cash Income and Avoid Risks

Steps for Employers

Both employers and employees should prioritize lawful payroll practices. Employers must establish payroll systems that ensure proper withholding and reporting. Employees should demand wage statements and verify that taxes and deductions are accurately applied. Consulting professional accountants or employment attorneys can help businesses and individuals address concerns about payroll compliance and avoid the risks associated with under-the-table payments.

Employee Actions

If you are being paid under the table, request that your employer begin paying you on the books as soon as possible. If your employer refuses to comply, or if you have been mistreated by an employer paying you under the table, contact legal professionals to discuss your options and fight for the compensation you are due. For those asking, “I get paid under the table, how do I show proof of income?”, maintaining personal records and seeking legal advice are critical steps.

Employers must recognize that the survival of their business could depend on their ability to pay tax liabilities, penalties, and interest. Consulting with experienced legal and financial professionals ensures compliance, protects employees, and mitigates the financial risks associated with unreported wages.

Have a quick question? We answered nearly 2000 FAQs.

See all blogs: Business | Corporate | Employment Law

Most recent blogs:

When Is a Doctor's Note Required for Work

When Is a Doctor’s Note Required for Work?

Employers can request a doctor’s note for extended absences or workplace accommodations but must follow privacy laws and legal restrictions. Employees have rights protecting their medical information, ensuring confidentiality and preventing workplace discrimination related to health-related absences.
What Is Considered Full-Time Employment in California

What Is Considered Full-Time Employment in California?

California does not have a fixed definition of full-time employment, but federal guidelines set thresholds between 30 and 40 hours weekly. Full-time status impacts benefits, overtime eligibility, and legal protections, with employer policies differing based on industry and regulations.
Do Employers Verify Doctor's Notes in California

Do Employers Verify Doctor’s Notes in California?

California employers can verify certain details of a doctor's note but cannot access medical records without consent. Employees have rights under HIPAA, FMLA, and state laws, protecting medical privacy and ensuring job security in specific situations.
How do you properly fire an employee in California

How Do You Properly Fire an Employee in California?

California employers must follow strict legal guidelines when terminating employees to avoid wrongful termination claims and compliance issues. Proper documentation, adherence to state laws, and clear communication help mitigate risks and maintain workplace integrity.
How is overtime calculated in California

How Is Overtime Calculated in California?

California mandates overtime pay at 1.5 times the regular rate for work exceeding eight hours per day or forty per week. Employers must calculate overtime correctly, considering bonuses, multiple pay rates, and employee classifications under state labor laws.
What are common grounds for termination

What Are Common Grounds for Termination?

Termination decisions require careful consideration. This article outlines 25 legitimate reasons for dismissal, addressing ethical, legal, and performance-based concerns while emphasizing workplace integrity and compliance.
Can an employer require a doctor's note for just one day of work

Can an Employer Require a Doctor’s Note for Just One Day of Work?

An employer can request a doctor's note for a single sick day, but policies must comply with labor laws and employee privacy rights. Companies should clearly outline documentation requirements in handbooks, ensuring consistency while avoiding unnecessary medical inquiries.
When should an employer consult an attorney

When Should an Employer Consult an Attorney?

An employment attorney helps businesses comply with labor laws, draft contracts, and resolve workplace disputes. Employers should consult one when facing legal claims, employee conflicts, or compliance concerns.
What is the statute of limitations for PAGA claims

What Is the Statute of Limitations for PAGA Claims?

The statute of limitations for PAGA claims in California is one year from the most recent violation, with a 65-day review period tolling it. Recent reforms clarified that only employees personally affected by violations within the one-year period can file claims on behalf of others.
What is a short script for firing someone

What Is a Short Script for Firing Someone?

A structured termination script ensures a professional, clear, and legally compliant approach to employee dismissals. Proper preparation, direct communication, and empathy help minimize disruptions and potential legal risks.
What Constitutes Wrongful Termination in California

What Constitutes Wrongful Termination in California?

Wrongful termination in California occurs when an employer fires an employee in violation of state laws, contracts, or public policy. Employees may have legal options if dismissed due to discrimination, retaliation, contract breaches, or other unlawful reasons.
What Should Be Included in a Termination Letter in California

What Should Be Included in a Termination Letter in California?

A California termination letter should include the employee’s name, termination date, reason for dismissal, final pay details, and return of company property instructions. It should also mention any applicable severance, benefits continuation, and legal obligations like non-compete or confidentiality agreements.
What Are the Rules for Bereavement Leave in California

What Are the Rules for Bereavement Leave in California?

California law mandates that employers with five or more employees provide eligible workers with five days of bereavement leave. This leave must be used within three months of a family member's passing, with confidentiality and anti-discrimination protections in place.
What Is the Borello Test - Worker Classification and Legal Implications

What Is the Borello Test? Worker Classification and Legal Implications

The Borello test helps businesses in California determine worker classification by assessing multiple factors related to control and independence. Despite the ABC test's implementation, the Borello test remains relevant for specific exemptions and legal considerations in worker status disputes.
How Does an EEOC Complaint Hurt an Employer

How Does an EEOC Complaint Hurt an Employer?

An EEOC complaint can lead to legal costs, reputational damage, and increased scrutiny, even if an employer believes they followed regulations. Mishandling a complaint risks lawsuits, financial penalties, and long-term compliance challenges that impact business operations and workplace morale.
What Is the WARN Act in California

What Is the WARN Act in California?

California’s WARN Act requires employers to give 60 days’ notice before mass layoffs, relocations, or plant closures affecting 50 or more workers. Non-compliance results in penalties, including compensation for lost wages and benefits owed to affected employees.
What is self-employment tax and how is it calculated

What Is Self-Employment Tax and How Is It Calculated?

Self-employment tax covers Social Security and Medicare at 15.3% on net earnings exceeding $400, with deductions reducing taxable income. Payments are made quarterly, and half the tax is deductible, ensuring compliance with IRS regulations.
What Does Per Diem Mean in Employment Terms

What Does Per Diem Mean in Employment Terms?

Per diem employment offers flexibility with daily compensation for temporary or on-demand work, commonly found in healthcare, education, and business travel. Unlike independent contractors, per diem employees receive wages subject to taxes but often lack benefits like health insurance.
How Many Hours Are Considered Part-Time

How Many Hours Are Considered Part-Time?

Part-time jobs generally involve fewer than 35 hours per week, but definitions vary across industries and labor laws. Employers must track work hours to determine eligibility for benefits, overtime pay, and regulatory compliance.
What Does an Employment Litigation Attorney Handle

What Does an Employment Litigation Attorney Handle?

An employment litigation attorney handles workplace disputes, including wrongful termination, discrimination, harassment, and retaliation claims. Legal representation ensures employees and employers navigate complex regulations, resolve conflicts, and protect their rights.
What Is the Medical Pre-Tax Deduction

What Is the Medical Pre-Tax Deduction?

A medical pre-tax deduction allows employees to pay health insurance premiums before taxes, reducing taxable income. Self-employed individuals may deduct premiums if not eligible for employer-sponsored coverage, with additional rules for health savings accounts and itemized medical expenses.
Is Working 32 Hours Considered Full-Time

Is Working 32 Hours Considered Full-Time?

Working 32 to 40 hours per week is typically considered full-time in California, but eligibility for benefits depends on employer policies. Overtime laws require higher pay for shifts exceeding eight hours, with additional regulations for breaks, benefits, and independent contractors.

Contact our attorney.

Please tell us your story:

0 + 2 = ?