Is it legal for an employer to pay som one under the table if they are a legitimate business?

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Is it legal for an employer to pay som one under the table if they are a legitimate business?

Asked on March 29, 2019 under Employment Labor Law, Missouri

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

 Being paid "under the table" is a way to accept or pay money for the purpose of getting around paying income tax or payroll tax. The Internal Revenue Service calls this practice the underground economy. Workers who accept such wages and employers pay who pay this way are attempting to not pay their taxes (income, SS and Medicare). This is illegal and can lead to a whole host of legal issues for both the employee and employer. 

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

No, it is not legal. Employers must report employee wages and withhold the appropriate taxes--not just income tax, but for Medicare and Social Security. They must make contributions to unemployment. Paying someone "under the table" so they don't report the income and make the appropriate payments violates the law.


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