It’s not illegal to pay your employees cash in California, but not keeping accurate records on how much you paid them and not paying the required payroll taxes are. There is a difference between paying an employee cash versus paying one “under the table”. If accurate records are kept, and all payroll taxes are paid, an employer can legally pay that employee cash.
However, “under the table” usually means that the employer has an intent to evade paying the required payroll taxes with excuses like they can’t afford the tax and insurance expenses, the business can be more competitive, it simplifies booking, it’s at the employee’s request, other businesses in the same industry pay “under the table” wages, etc. As an employee, it sounds good to have that extra cash in your pocket, but what are the risks?
Bottom line, paying an employee “under the table” is illegal. Employers can face, and will be subject to, state and federal income tax audits, fines, and criminal prosecution for not reporting the wages. Employees on the other hand, may also face the same audits as well as being denied unemployment insurance or state disability insurance.
For an employee, if you willingly do “under the table” work, you are also responsible for reporting all wages earned and paying the required withholdings, even if the employer chooses not to report your wages themselves. Times can be hard, and having some extra cash in your pocket can help out in that moment. But, in the long run you and your employer can end up paying thousands of dollars more in fines and penalties for not paying the required withholdings.
Sacramento, CA 95821