<p>I think (hope) the FBI has bigger fish to fry. These arrangements were pretty common in my area of NJ where there were many local small businesses and a somewhat cavalier attitude about government and taxes. </p>
<p>Underground economy article:</p>
<p>[Economics</a> scholar points to a surging underground economy (April 13, 2009)](<a href=“http://www.news.wisc.edu/16555]Economics”>Economics scholar points to a surging underground economy)</p>
<p>
Certain government and private industry positions require a secret or top secret clearance and for those positions they definitely drill into one’s past. I agree with ‘toadstool’ - it’s best to not do anything that could cause issues with such applications - especially if one is younger and should keep their options open - like ‘blossom’s’ Attorney General job.</p>
<p>I think the workman’s comp issue is HUGE.</p>
<p>If she’s not on the payroll, she’s not on the workman’s comp. And if she’s not on workman’s comp, if she gets hurt on the job, goes to the hospital, tells the ER people that she was hurt on the job, your health insurance may not pay because workman’s comp should pay. But there’s no workman’s comp. </p>
<p>Sorry … but running a business is a big deal. And paying people under the table to save on workman’s comp (which is expensive btw), taxes, and save having to comply with wage and hour laws is just not OK. </p>
<p>I’m running a business and I’m paying my employees on the books – and paying workman’s comp too. I am fully aware that not everyone is.</p>
<p>I have absolutely NO sympathy for a small businessman running his business this way. Not only is it illegal, not only does it do real harm to his employees, but it hurts his competitors in a very real way. There are hundreds of thousands of small businesses that comply with employment law and they should not have to compete with people who have a significantly lower overhead because they choose to break the law. </p>
<p>Will this hurt the OP’s daughter’s college application? Most likely not, because as many posters have already pointed out, most colleges would have not way of knowing that she had worked “under the table”. But if I were a college admissions counselor and I did find out that an applicant was working this way, with full knowledge that it was illegal, I would have serious doubts about the candidate as some one I would trust.</p>
<p>
</p>
<p>Tell them she should be paid more than minimum wage because her tax burden will be HIGHER, not lower. Say that she will report the income. If she reports the income, then she will be subject to the Self Employment Tax of 15.3% rather than the 7.65% Social Security tax.</p>
<p>If she plays it straight, then she has a paper trail to prove she is really an employee. As such, she would be entitled to Workman’s Comp. She sues the store, and it should be fairly easy to establish that she was an employee. The Insurer will then have to sue the store for fraud.</p>
<p>However, it is my understanding that workman’s comp actually limits liability, rather than granting employee benefits. If they claim she is not an employee, then they would be liable for full costs without limits. For instance, if she is killed, workman’s comp may limit liability to $100,000. However if she is not an employee, then you can sue for a lot more than that.</p>
<p>
</p>
<p>Assuming she doesn’t report the income, it is not an IRS issue, it is a FASFA issue. The discrepancy may come up in the review for financial aid. If she worked 20 hours per week, why doesn’t the income show up on her FASFA?</p>
<p>And if the income doesn’t show up on her FAFSA couldn’t the college interpret that as an attempt to boost financial aid illegally? Hiding assets as it were.</p>
<br>
<br>
<p>Why wouldn’t you report it on the FAFSA? Income earned by a student often doesn’t rise to the level of requiring the filing of a tax form. Where would be the discrepancy?</p>
<p>
</p>
<p>I’m not sure I understand the discrepancy either. Will she file income taxes? If so, then make everything match. If she doesn’t file taxes then there is no discrepancy? If the payment is cash, then there isn’t any money withheld to be refunded…</p>
<p>The moral issue aside of what this employer is doing…think about the money as if it were babysitting money or lawn mowing money or any other cash transaction and treat it how you would treat that money.</p>
<p>Also, if college admissions offices are actually doing job verification I would be extremely surprised. The only issue in my opinion and for the student is what would happen if that student were hurt on the job and how the student feels morally about working “under the table.”</p>
<p>Funny story…</p>
<p>My daughter works for a small caf</p>
<p>^Smart girl ! 
She will go far.</p>
<p>The real issue is the unfair burden placed on the employer that follows the rules. By allowing employers to skirt their requirements or just down right steal, yes it is stealing there is an uneven playing field created. It is very tough to be in business so if an employer has a 5-10% advantage by lower payroll costs or skims an extra 5-10% by stealing the sales tax the competitors are disadvantaged.</p>
<p>Another big issue is allowing your child to work for someone that you know is unethical and disobeys the laws. What else will you allow them to do for money?</p>
<p>All 3 of my kids have not run into this problem with their part time or full time jobs. My oldest was concerned with her first job when the first two weeks she was paid cash out of the register. She knew the other high school employees were paid by check legally. While she thought about saying something to the owner he corrected the problem on his own. He had an ill wife and did not have the time to set her up on the payroll and did not want her to have to wait to be paid.
She recently had the dilemma of working for some people who she felt were not honest in their business. She was expected to lie to customers. She felt sick to her stomach about what she was doing. She was looking for work but needed the job. My husband and I had words over the issue. My D felt she could not continue this job and wanted to quit. She also wanted to report them to someone. My H felt she should stick it out and not quit till she found another job. (She was living in an area with high unemployment). The final straw came when the spouse of the owner refused to take some sick animals to the vet. My D left in tears. Unfortunately she was not able to find another job for 4 months. My H still felt she should stick it out. I supported her quitting. She had no source of income for those 4 months and we ended up supporting her. If she had not had a source of support she would have had a harder time taking an stand.</p>
<p>
Under the table puts the employee at significant risk. I used to think this was a crime with ‘no victim’ except the government, but no longer.</p>
<p>I agree with tom’s comments and he’s in a position to know about this stuff from the collections standpoint.</p>
<p>What I can’t imagine is living with the worry that you’re going to get a knock on the door someday. It sounds like the amounts are small enough in many cases so that tax authorities don’t bother investigating and prosecuting or the fines are just a slap on the wrist and business owners talk to each other about what they can get away with.</p>
<p>And what if she is injured on the job?</p>
<p>Old thread, folks.</p>
<p>I had an employer once who had me fill out all the forms when I got hired, but then flatly refused to give me my W2. Eventually my father had to go in and get it for me.</p>
<p>People ask us all the time to work under the table , but they are adults , not teens. They ask because they are collecting unemployment and don’t want to lose that… We don’t do it anyway because it just isn’t worth it living with the fear of someone knocking on the door…a business acquaintence got into trouble when one of their longterm employees was fired and made a call to the labor board letting them know all about their under the table workers , still employeed</p>
<p>This is kind of like software piracy where companies buy one copy and install it on a bunch of computers. You fire an IT guy that maintains this stuff and he drops a dime to the Business Software Alliance and they start an investigation and find out that you’re using hundreds of thousands in software that you didn’t pay for.</p>
<p>I guess it does exist on both sides with employers and employees.</p>
<p>There are areas in our lives where I actively avoid easy income so that I won’t have to deal with the reporting issues.</p>
<p>We’ve never been in the position of having to make these kinds of decisions. Our son and daughter have been hired as independent contractors but those were for internships and they were quite worthwhile (they would have been worthwhile even if unpaid).</p>
<p>I live in the NYC area, so trying to fight this sort of war would be a vocation. i have one son who is in the theater business, a poor, starving artist, and he takes whatever work he can get. It’s is often under the table. Most of it is. </p>
<p>For many who live in this area, just having a legal job is a luxury.</p>