You hear of a great job. The employer will pay you under the table. It is less than standard for the industry but because the company takes no taxes and fees out, you may make more than if you worked for the same salary legitimately. This is a deal, you decide. You will be paid in cash every dime of your hourly salary. This sounds too good to be true! Is it? Yes, it is too good to be true.
First, take note: just because your employer pays in cash that does not mean that you are paid under the table. It is not illegal for the boss to pay you in bills and coins as long as there is a record of the payment and the paymaster pays all payroll taxes and other expenses including FICA and insurances. Of course, you are responsible to pay your own taxes even if you are paid under the table.
If you discover that the boss pays you clandestinely then you need to seek a job elsewhere and do not return to that company.
Everyone knows that paying employees under the table is illegal. So, keep in mind your employer knowingly breaks the law to keep you off the books and out of the sight of the government. Why would he do that if the only beneficiary were you? Simple, he would not.
The bottom line is king in business
In business, labor costs are your highest expenses. Employers often seek to reduce those costs to increase their bottom line. They may not do it to make themselves rich but just more profitable and to keep the company afloat. When a company seeks to cut costs the first place they often start is personnel.
Layoffs lower the business expenses and increase profitability. They are not inexpensive in the short run. A company has to pay every dollar owed to all terminated employees just before they walk out the door. This means, every dime of regular pay, vacation if applicable and any other funds owed to them. Laid-off workers often require additional pay in severance as well. This all increases the short-run expenses to bring the company to profitability in the long run.
Labor costs include your salary, insurances, benefits and FICA. Your employer pays one-half of the FICA taxes on top of what the company takes out of your check. So all those expenses fall off the employer’s books when you are laid off or you leave the company.
Reducing the workforce expenses may help a company’s profitability. So, the ways the employer pays you always are in light of the bottom line and never in light of what benefits you. If you are paid well that is because you are benefitting the company in a way that continues its profitability even with your high salary. The employer realizes if you get a better offer and go elsewhere, the company loses a valuable asset — you! If you are paid poorly that may be because you are barely a benefit to the company. You would probably do better elsewhere and your employer may happily wave goodbye when you leave.
Who benefits when you get none?
If you are paid under the table, then your employer is not paying benefits, health insurance, FICA, worker’s comp, unemployment insurance and other fees. This makes your labor costs just what you receive weekly which the boss sees as a benefit to the company and for no other reason. This will never benefit you as an employee nor in the other areas of your life.
When the company pays you clandestinely, you don’t exist. If the company pays you off the books there is no work history in any system. According to all the employment databases, you are unemployed. There is nothing for which to qualify you for social security which is the basis for collecting those benefits. There is no employment insurance because you are not employed. There is nothing to show that you actually exist as an employee anywhere.
You received the full amount of an hourly wage but payment today is in salary and benefits. You received salary and no benefits even those mandated legally. You may be able to recoup some benefits but most are gone forever. Technically, in a totally fair world, you would be paid a higher salary to cover the lack of benefits. However, your employer is only interested in benefitting the company and not you. Most likely you are paid a lower salary to keep his costs low so why would he make up for not paying you in benefits by paying the comparable salary while still breaking the law?
Underground workers must stay underground
If your employer is paying you off the books, not only do you not exist, the employer wants it to stay that way. That means doing nothing to draw attention to your existence in the company. Easy to do right? Not if you get injured on the job.
I know of an immigrant from Central America who worked in the roofing industry under the table. He fell off the roof. What did the employer do? Did he call an ambulance? No, because that would call attention to the accident and the immigrant’s off-the-books pay status. The injured worker told me he sent him to the hospital in a taxi and told him to keep quiet. Obviously, that was not possible. The employer was found and fortunately, the government went after him for worker’s comp and fees that he never paid.
The immigrant eventually recovered but notice how little the employer cared about his employee. He may have smiled at him and even been friendly to him but when he needed to hold his end of the responsibility for his injured employee, he endangered him rather than risk knowledge of his clandestine employee. The worst thing that employer could have done for this employee who fell off a roof and hurt his back was to put him in a taxi. This shows how much the company owner did not respect this worker. This is the kind of person you are working for when you get paid under the table immigrant or not.
The laws on the books may seem to be a burden to employers but they are there to protect their employees and as a kind of insurance to both employer and employee for when things do go wrong. Of course, some will abuse the system on both sides that is an issue for attorneys but the bare minimum of the state and federal law is there to ensure some form of protection for both company and employee. Anyone who tries to skirt around the legal requirements is like the circus owner forcing the tightrope walker to cross the arena without a net and you are that tightrope walker.
One US citizen told me he was looking for a legitimate job after working under the table for a short time. He realized it was not worth it. He had no protection if he got injured.
I took a phone call once from a son of two parents here without documents. They worked their whole lives under the table. They wanted to retire and the son asked me if his parents qualified for any benefits. I referred him to a non-profit immigrant services organization. I am sure they told the son there is nothing for them. They were off the books their whole lives. They had no documented work history. There was no pension fund for them, no IRA and no social security. Their best bet is to return to their home country and live off savings they hopefully had in some bank somewhere.
You are familiar with the saying: “If it sounds too good to be true, it probably is.” If someone is going to pay you off books it definitely is too good to be true for you.