Paying “Under the Table”
Are you occasionally paying people under the table when having them participate in a working interview before deciding to hire them? Or are you paying them for doing other work for you on the side? This is a high risk because what you are doing may be illegal.
If your interview process includes having the candidate follow someone around (shadowing) or performing the job for several hours or days, this is compensable time. Paying this person cash instead of adding them to payroll could easily create problems for you. Adding them as an employee is more work initially but that’s because you’re only thinking short-term, not the long-term.
In the long-term, you need to look at a potential EDD audit because one of those people added you as an employer when they filed for unemployment. If EDD doesn’t show that person listed as one of your employees, you may be audited to find others not reported.
Your employees may have additional skills not needed for their usual job. Using that skill for you during off-hours doesn’t make them an independent contractor… legally, they are likely to be just working more than 40 hours per week for you and not being paid the overtime pay they legally deserve. Everything needs to run through payroll.
If you are not processing every penny you give a worker through your payroll, you are taking a risk. If you need more workers, it means you’re growing so don’t put your business at risk by making poor choices at this critical juncture in your business.
About Your Columnist
CJ Westrick is a featured columnist for Women Lead, the official blog of Connected Women of Influence, where she covers all things human resources and managing people in the workplace. CJ Westrick, SPHR, has been in human resources (HR) management for over 20 years and has maintained her SPHR (Senior Professional in Human Resources) national certification since 2002. She started HR Jungle, a human resources consulting firm, in 2006 to provide senior-level HR expertise to businesses without internal HR.