CASH PAYMENT AND AN ACCURATE ITEMIZED WAGE STATEMENT
There is no law prohibiting your employer from paying you by cash.. However, if your employer pays you cash “under the table”, most likely your employer does not report such wages to any government agency.In an effort to save money, your employer may not withhold and pay his share of Social Security and Medicare (FICA), State and Federal income taxes, Unemployment Insurance taxes (FUTA), State Disability Insurance (SDI), State Un-employment Insurance (SUI), workers’ compensation, overtime, or many other employment benefits. If you are paid cash “under the table”, your employer is potentially liable for the following:
- Unpaid employment taxes, penalties and interest;
- Unpaid unemployment and disability insurance penalties and interest;
- Unpaid workers’ compensation coverage; and
- Many other Labor Code violations and penalties for such items as unpaid overtime, meal and/or rest break violations, pay stub violations, etc.
Under California Labor Code Section 226(a) every time your employer pays your wages, whether by check, in cash, or otherwise, you must be given a detachable part of the check or a separate writing showing required information. The following information is required to be on your itemized pay statement:
- Gross wages earned
- Total hours worked (not required for salaried exempt employees)
- The number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece rate basis
- All deductions (all deductions made on written orders of the employee may be aggregated and shown as one item)
- Net wages earned
- The inclusive dates of the period for which the employee is paid
- The name of the employee and the last four digits of his or her social security number or an employee identification number other than a social security number
- The name and address of the legal entity that is the employer
- All applicable hourly rates in effect during the pay period, and the corresponding number of hours worked at each hourly rate by the employee.
Note: Effective January 1, 2008, only the last four digits of your social security number, or an employee identification number other than a social security number may be shown on the itemized statement. Penalty for Failure to Provide Accurate Wage Statements A California employer that does not provide accurate wage statements may be liable for the following damages and penalties; California Labor Code section 226(e) provides that where an employer fails to provide wage statements, the employee is entitled to recover actual damages or $50 for the first pay period in which a violation occurs and $100 for each subsequent pay period, subject to an aggregate penalty of up to $4000, plus costs and reasonable attorney’s fees.
DISADVANTAGES OF CASH PAY “UNDER THE TABLE” TO EMPLOYEE:
Since the wages paid to you by cash most likely aren’t reported by your employer to any government agency, you have the following disadvantages:
- In an effort by your employer to save money, your employer did not pay any social security and Medicare payments on your behalf. Basically your employer did not pay his share of your social security and Medicare taxes, therefore at the age of your retirement you will not be eligible for any social security benefits;
- Since your wages were not reported to any government agency, there is a high chance that your employer failed to pay on your behalf any Federal or State unemployment insurance. Once you are terminated for any reason, you will be ineligible to collect unemployment benefits;
- Since you received cash payment, your employer most likely did not include your wages in the worker’s compensation insurance required by law to be maintained by every California employer. In case of a work injury, your worker’s compensation claim will be denied because you are not included in your employer worker’s insurance coverage.
- In case of a work injury your state disability claim will be denied because your wages were not reported to Employment Development Department because the State Disability Insurance (DSI) never has been paid on your wages.
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