Nevada City, CA asked in Employment Law, Business Law and Small Claims for California

Q: Employer is with holding wages (1 year.) Claims employee defined as "paid under the table",no recourse in Ca. Court?

Claim's employee has no recourse in California Courts to file claim, for past wages or additional damages, fines, penalty, waiting period (etc.). Because employee was "paid under the table" and will suffer fines, penalties and jail time also. Employer has judgements against for ..State Liens on small business (5), State Liens Income on small business (3), Secretary of State-Lien Tax, UCC Filings (2), State Tax Lien (7), Civil Claims(5) and Small Claims (4) (number after judgement is # of claims against Employer). Will employee get into trouble with the law?

2 Lawyer Answers
Neil Pedersen
Neil Pedersen
Answered
  • Westminster, CA
  • Licensed in California

A: This is a scare tactic used by employers who unlawfully fail to pay their employees properly.

If you have received money under the table, i.e., been paid without the employer reporting the money to the government, you still have an obligation to report the income to the IRS and the Franchise Tax Board and to pay into FUTA, SDI and Medicare. If you have not done so, then you probably owe money to the IRS and the CA Franchise Tax Board for the unreported income. If these taxing authorities were to learn of your failure to pay taxes, it is possible that they would seek payment on that past income. Is it possible under those circumstances that you would face fines, penalties and jail time? Yes, but the jail time part is unlikely if you address the issue before you are "caught." It would be wise to speak to a tax expert to find out what kind of money would be involved before you make any decisions to move forward.

That said, if you have been paid under the table, you are likely owed a good amount of money from this employer for multiple violations of the Labor Code. The employer's exposure to your claim is likely far greater that your exposure to a tax claim.

The real concern here is that it appears your employer is a shady character with so many other financial claims against it that you have to be concerned that even if you bring a claim you may never get paid after you win. It seems the prudent move is to get away from this employer as quickly as you can. Find a new job as soon as possible and leave.

If you wish to pursue a claim against your employer, even after you have left it, locate and consult with an experienced employment law attorney as soon as possible to explore your facts and determine your options. I would suggest you look either on this site in the Find a Lawyer section, or go to www.cela.org, the home page for the California Employment Lawyers Association, an organization whose members are dedicated to the representation of employees against their employers.

Most employment attorneys who practice this area of law offer a free or low cost consultation in the beginning and then, if the matter has merit and value, will usually agree to work on a contingency basis, meaning you can hire an attorney without paying any money until the matter results in a positive outcome for you. Many advance all the costs of the litigation as well. Do not let fear of fees and costs keep you from finding a good attorney.

Good luck to you.

Maurice Mandel II
Maurice Mandel II
Answered
  • Newport Beach, CA
  • Licensed in California

A: Neil gave you a very detailed answer, and I agree with what he said. You also be aware that the Labor Commissioner, who handles your wage claim, is not very likely to report your claim to the IRS or FTB over the taxes. This wage-stealing employer is much dirtier than you are. The wage laws are directed at the EMPLOYER'S obligations to pay and withhold taxes properly, not the EMPLOYEE'S. If anyone gets reported or prosecuted, it would be the person who failed to withhold the taxes properly. It is up to you to report all income that you receive to the IRS and FTB, whether you receive a proper W-2 or 1099, or not. That is the potential problem you have. If you reported income to the IRS and filed tax returns, you have very little to worry about. In addition to the cash payment, you say he is withholding one year's wage payments to you, this opens him up to an award of LIQUIDATED DAMAGES (double minimum wage for every hour that at least minimum wage is not paid), 30 days pay as waiting time penalties, interest on unpaid wages, $50 per pay period or more for no statement of earnings (paycheck stub), attorney's fees and more. THE REAL PROBLEM is being able to collect all your money from this guy, particularly when he is being besieged by all the other claims. GO TO THE LABOR COMMISSIONER WEBSITE TO FILE A CLAIM RIGHT AWAY, because payments will likely be made to those in line first. Consult a local attorney directly to see about what to claim, and who to sue, you may be able to go after more than one individual.

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