Paying Your Employees Under the Table Will Cost You

Some employers think they can pay their employees under the table and save a buck, but this practice will cost many employers much more…

In 2018, the California Supreme Court determined in Dynamex Operations W. v. Superior Court that an employee was someone under the direction or control of the employer, someone who performed work in the usual course of the employer’s business, and someone who is not engaged in their own independent trade.  Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903.  If you have hired a person, and determined when, where, and how the employee works, they are most likely an employee and not an independent contractor.  If you hired an employee, you cannot pay them under the table.  You must pay your employees minimum wage and maintain worker’s compensation insurance for them. 

The law requires employers to pay an employee minimum wage for all hours worked. Any employer who does not pay their employees at least minimum wage is subject to paying a civil penalty, restitution of wages, liquidated damages, and waiting time penalties.  These penalties can add up to thousands of dollars for even one employee. 

An employer must also obtain worker’s compensation insurance for their employees.  Failure to obtain worker’s compensation insurance is a crime punishable by imprisonment in the county jail for up to one year and a minimum $10,000.00 fine for the first offense under Labor Code section 3700.5. 

You will not save any nickels cutting corners with your employees.  The State of California will collect your pretty pennies for failure to comply with the law.  If you have questions, contact Dias Law Firm, Inc. and let our knowledgeable attorneys assist you.  Call us today to schedule to a consultation!

By: Sarah M. Hacker, Esq.

For the general public: This Blog/Web Site is made available by the law firm publisher, Dias Law Firm, Inc., for educational purposes. It provides general information and a general understanding of the law, but does not provide specific legal advice. By using this site, commenting on posts, or sending inquiries through the site or contact email, you confirm that there is no attorney-client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.

For attorneys: This Blog/Web Site is informational in nature and is not a substitute for legal research or a consultation on specific matters pertaining to your clients. Due to the dynamic nature of legal doctrines, what might be accurate one day may be inaccurate the next. As such, the contents of this blog must not be relied upon as a basis for arguments to a court or for your advice to clients without, again, further research or a consultation with our professionals.

Photo 222987424 / Paying Under Table © Apidach Jansawang |