Q: I am 1 of 2 employees for a real estate broker in San Diego. I am an exempt employee. I am not a licensed RE agent.
Per my contract, I receive $3,500 per month salary through a payroll company. I also receive 8%-10% of my employer’s commission which has been paid via 1099 since I started years ago. My tax lady said this is wrong because I should be getting paid through payroll for the 8-10% I receive. My employer must have had an epiphany and changed his mind and now wants to run my 8%-10% through payroll. I am fine with this because that is the right thing to do and I will save in taxes. Thing is, he is now deducting from my contracted 8-10% the amount necessary to cover 50% of his additional payroll costs. These “additional payroll costs” that he is speaking of are HIS employer payroll costs and have nothing to do with me. This is unfair and I feel taken advantage of and although the amount is small, the principal of the matter is the greater issue. There are also other name-calling issues that make this an uncomfortable work environment.
What can I expect if I pursue this?
A:
Many possible issues with your payroll arrangement. Without more facts, it's hard to determine the specific issues. However, the Employer is most likely in Breach of your Employment Contract, as I doubt the Contract contemplates any deductions from your pay for Employer payroll costs.
Plus:
An employer can lawfully withhold amounts from an employee's wages only: (1) when required or empowered to do so by state or federal law, or (2) when a deduction is expressly authorized in writing by the employee to cover insurance premiums, benefit plan contributions or other deductions not amounting to a rebate on the employee's wages, or (3) when a deduction to cover health, welfare, or pension contributions is expressly authorized by a wage or collective bargaining agreement. Labor Code Sections 221 and 224.
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