I’ve had a new permanent job for the past few months that pays by the work done rather than salary or hourly rate. I’m a statutory employee in a well-established small business. After keeping records and doing calculations, it seems that I’m getting paid less per workload than advertised and discussed, though I will know more about this after my next payment in the next week or so. I suspect that out of a dozen employees, half have been there quite awhile and probably get paid the stated rate, the other half are relatively new and maybe get a percentage less (unless I’m the only one being shortchanged) which goes into the pockets of the owner so it’s kind of a ponzi scheme. Most of them probably don’t know this though since they probably don’t keep track though the owner mentioned someone quitting because he “wasn’t getting paid enough”, but their complaint may have been due to the dry spells in the business that recur within a month.
I keep my own tally of hours worked and calculate that I would be earning about $18 hourly if paid the stated rate, but seem to be making less than $15 with the owner pocketing a percentage. His business has a contract with a governmental entity that contracts out and sends the money to him leaving him to pay the proper amount to employees and he pays a monthly cash amount rather than by paycheck. I estimate the yearly shortfall to be $5,000 to $10,000.
Things may be different over here, but I’d expect to be offered a contract on employment which would lay down what is to be paid for what, and any deductions that are to be made - not just rely on the job advert (any job advert is likely to have weasel words like “up to” and “in the range X-Y”.
Likewise, I’d expect payments to have a payslip detailing exactly has been paid and any deductions. The employer would normally have to do this as part of their accounting (as appropriate) for the tax authorities, pension fund or health insurance company.
Is that not happening here?
If this is payment out of government funding, then a lot depends on what the contract with the relevant funding agency states about accounting for the money and what it is to be spent on, but it may well not cover the details of exactly what staff are to be employed and at what rates.
You might need an expert in your local employment laws (that’s one of the things unions are for).
I thought I pay the taxes after filing a schedule C at tax time. Maybe that missing percentage is just being withheld for taxes, so I could ask him about that. I didn’t know statutory employees receive a W-2. I’m fairly sure there’s no pension since he hasn’t mentioned one.
There’s a paper showing a few of the monthly expenses I owe, and I receive the money by courier. The withheld amount may be for taxes as someone mentioned.
No offense, but you are only fairly sure there is no pension, and you are not sure if taxes are being withheld or not. It’s something I would get clear, sooner rather than later.
I don’t know what country you are in, but in the US the IRS is not always understanding in situations like this - you may wind up owing a large sum no matter what your employer should have done. Is there such a thing as an HR department where you work?
What do you mean by statutory employee? Is this another name for contractor? Look up the rules for determining if the job is a contractor job or not - if not he cannot treat you like one. If you are, you can demand a statement of your hourly rate, plus there are IRS forms he must eventually send you as a contractor.
The whole thing sounds sleazy to me and likely illegal - especially if the money is coming from a government contract which usually has strict rules about things.
Demand your pay rate in writing. If he won’t give it go to a labor office, and you might think about complaining to the government agency paying this guy.
I wasn’t sure what a statutory employee was so I looked it up and it appears that the definition of a statutory employee is one who would normally be considered a contractor but for whom payroll taxes, etc, must be withheld anyway.
That’s probably what’s happening here. I’m going to assume for now that the missing percent is going to withheld taxes and will inquire about it my next work day. I heard a story from a former employee of a competing business that he was getting paid less than promised, so I feared the worst. I haven’t been a statutory employee before.
Even if you are being paid in cash you still should be getting a pay stub describing what is being withheld. I’ve read of people whose taxes were not withheld (or worse, the money supposed to be sent to the IRS was pilfered by the employer) and they wound up in a lot of trouble. Not saying that is happening here, but you have no documentation of anything at the moment.
Pull together everything you have written down - pay slips, hire on letter, etc. - and make an appointment with your local wage and hours office. Let them look it over and advise you. They are trained to spot underpayment schemes - and by that I mean underpayment to you OR to the government in taxes. Then follow whatever advice they give you.
You should be getting a paper showing your gross pay, and all withholdings. That would include income tax (fed and state), Social Security and Medicare, the monthly expenses you owe. . . wait. Back up. How do you owe monthly expenses if you’re the employee?
I’ll be honest: something about this is really making my BS meter redline. But if your willing to stick with it, that all that really matters. I would strongly suggest that you set money aside for taxes, including both employee and employer parts of SS and Medicare, so that you’ll be prepared for any nasty surprises come tax time.
If you’re having taxes being withheld, you should be getting a pay stub that shows how much in taxes were withheld. At my last job I was surprised to not be handed one and asked about it; they said that they were all online. At my current job I just automatically assumed that was the case without anyone telling me, and figured out where to go on their website easily.
Any legitimate business is going to either have their payroll outsourced, the providers of which are given all the information needed to run payroll, and output everything needed for the payroll, or have people employed that do the payroll themselves. Someone has to figure out how much to pay people, and they need some way of keeping track of everything. The information has to be available somewhere. Humbly request the information regarding the details of your pay at the next relevant opportunity.
If the information cannot be provided, there is a serious problem. My best guess is the owner is only paying people what he thinks will cause them to not complain and isn’t keeping track of anything at all, and presumably not sending anyone tax information or making deposits of payroll taxes. If the IRS finds out, everyone involved will owe a bunch in taxes. If the employees don’t have pay stubs or a W-2 to show that they had taxes withheld, they will be liable for them even if they thought they were being deducted.
Jumping on the bandwagon to say that this sounds pretty hinky to me.
There’s nothing illegal in being paid cash as long as the rules are being followed re deductions. Nor is there anything illegal in the boss selling the work to the government for, say, 2000 a week and paying you 1200 a week - it’s called subcontracting and is in fact quite common. But, couriering you cash, with no other documentation, is a recipe for causing you trouble.
Per Wikipedia, a statutory employee is a contractor who is treated like an employee for withholding purposes - i.e. the employer should be withholding Social Security and Medicare from your pay (plus, possibly, state / federal income taxes).
HOWEVER: you should be receiving some kind of pay stub, even for cash, explaining it. If you thought you were to earn 1200 a week and they’re sending you a bagful that adds up to 800, you need to know the 1200 figure, and what’s been withheld, for your own records and protection.
If they can’t or won’t provide you with that kind of documentation, find a new job ASAP and drop a dime on this one to the proper authorities.
After talking with him about it, it appears that I’m a co-owner rather than statutory employee and I was paid the correct amount. My prior calculation was done late at night when I was tired and I used the wrong month for comparison, which I noticed later after posting this thread. I vaguely remember being told I’d be a statutory employee earlier in the year when hired. The job is advertised as being a co-owner.
My prior calculation was done late at night when I was tired and I used the wrong month for comparison, which I noticed later after posting this thread. I vaguely remember being told I’d be a statutory employee earlier in the year when hired. 
The job is advertised as being a co-owner.