Looks like this employer is knowingly violating the law to avoid paying taxes, covering you with workers' compensation insurance, and get out of making contributions into YOUR accounts for unemployment benefits, Social Security, and more. I suggest you start looking for another job right away because this one is limited. This employer has already indicated she is not going to pay you much and not going to pay you fairly or as required by law. And it is likely she is violating other laws, too. When it all comes to a head, she (or her business) may file for bankruptcy and walk away from her obligations.
It is illegal for an employer to retaliate against an employee who complains about illegal pay practices. There are penalties against the employer and the employer may even be charged with a crime.
You will need documentation to support your case. Keep your documentation at home, not at work, to make sure it remains private and doesn't disappear. For documentation:
Keep track of all the information related to this situation. Write down the details using names, dates, location, witnesses, times of day – as much as you can. Save copies of any documents.
For every work day, keep a log of all your work time, including the time you start working, the time you stop working, and the start and stop times of any breaks (meal or rest). Time spent walking to or from a time clock is considered work time, not break time. Many people find it helpful to keep this information on a calendar.
For every work day, keep track of the actual work duties you perform and how much time you spend on each duty.
The Division of Labor Standards Enforcement (DLSE) is a sub-agency within the California Department of Industrial Relations. http://www.dir.ca.gov/dlse/. Some people refer to the DLSE as the Labor Commissioner. The DLSE enforces California's wage and hour laws, including those pertaining to overtime, rest and meal breaks, and more. The link for information on filing a wage claim is here: http://www.dir.ca.gov/dlse/howtofilewageclaim.htm. You have THREE YEARS from the last day of work to file a Labor Commissioner claim for unpaid wages.
If you pursue a lawsuit in state court, you have the potential to recover unpaid wages going back FOUR YEARS (instead of three) from the date you file suit, per Business & Professions Code sections 17200 et seq. To find a plaintiffs employment attorney in California, please go to the web site of the California Employment Lawyers Association (CELA). CELA is the largest and most influential bar association in the state for attorneys who represent working people. The web site is www.cela.org. Click on "Find a CELA Member" and you can search by location and practice area. Many CELA attorneys represent clients throughout the state.
Note that if you have not been paying taxes on the money you've earned over the past year, you will have to pay them. It will feel like a heavy blow because the bill will come all at once. However, you should be able to work out a payment plan with the federal and state taxing authorities, especially because you are actually a victim here. Be as cooperative as you can be.
@MikaSpencer * * * PLEASE READ: All legal actions have time limits, called statutes of limitation. If you miss the deadline for filing your claim, you will lose the opportunity to pursue your case. Please consult with an experienced employment attorney as soon as possible to better preserve your rights. * * * Marilynn Mika Spencer provides information on Avvo as a service to the public, primarily when general information may be of assistance. Avvo is not an appropriate forum for an in-depth response or a detailed analysis. These comments are for information only and must not be taken as legal advice. Legal advice must pertain to specific, detailed facts which are impossible to gather on a public web site like Avvo. * * * No attorney-client relationship is created based on this information exchange. * * *
Ms. Spencer provides a good summary of the law related to your issues.
I wonder whether your employer gave you a 1099 for the money that she paid you in cash.
best of luck
As MS. Spencer pointed out, it is not legal. It is very illegal.
Not only is there no benefit to you to be paid under the table unless you do not report your income, but you are actually losing money. Every employer pays part of the taxes for an employee in addition to the amount that is withheld from the employees check. Most employees do not realize that their employers actually pay employment taxes in addition to what is seen on the pay check stub.
By not having you on payroll, your employer is probably not paying your Medicare, Social Security, Workers Compensation, Unemployment, and FUTA or Federal Unemployment. If you report your earnings on your taxes you may have to pay some of these taxes that your employer is supposed to be paying.
Additionally, if you do lose your job and try to get unemployment, there could be a very bad rude awakening there as well. You may not even qualify for unemployment or your wages may be under reported which would give you less benefits. The same goes for disability as well.
At a minimum you should discuss with an accountant how much money from a tax point of view that this is costing you and that money should be paid to you by your employer.
Kevin A. Spainhour, Esq. Spainhour Law Group www.slglawyer.com.
All good answers. Your employer is barred from entering into an illegal agreement, and even if you go along you may still recover all that you are owed. The tax consequences are real for you and for your employer. As advised talking to an accounted is a good idea; however, your employer will likely be liable for both the employer and employee portion of the employment taxes as well as other contributions that you should have been making as an employee.
When an employer takes an adverse employment action against you for requesting that they follow the law they are engaging in retaliation. In California before you can sue an employer for discrimination you must file a complaint with Division of Fair Employment and Housing (DFEH). You may also file a claim with the Bureau of Labor for unpaid wages. Since your employer is already reducing your wages you should file complaints with both agencies. You may also want to explore a report to EDD for tax fraud by your employer. Of course you will need to make sure you have paid all of your own taxes.
Since some of your details are not clear, you should consult a labor/employment attorney to clarify any potential liability you may have for taxes, and to determine a course of action to make sure that your entitlements are all fully funded by the employer.