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.