My buddy, after a long, miserable stint of unemployment, got the equivalent of his dream job. I don’t want to say what industry it’s in or anything, but he got a job that deals with his #1 hobby in a field that it’s usually impossible to get jobs in.
But his employer’s being KOOK about payroll. I guess he hit the guy up about filling out his tax witholding information, and the guy shrugged it off with a “Don’t be so uptight!” attitude before finally relenting. Then, he worked his first three weeks without getting a paycheck because the guy kept “Totally flaking, bro” on it - and when he finally got it, it was the equivalent of a personal check (it was a business check, but hand-written) with no taxes deducted, no YTD info, etc.
This is an office job in a legit business, not some sort of auto garage, so I’m really sketched out by this behavior on the part of his boss. He’s freaked out by it, but the combination of “dream job” plus his 9 months of unemployment have him too scared crapless to push the issue.
What would you do if you were in my friend’s situation - what advice can I give him?
Does this sound like any sort of scam or wrongdoing to you? Is there anything else that he should be looking out for or aware of in the situation?
At the least, your buddy should be getting some kind of statement with his paycheque, right? Even if the employee chooses not to have income tax taken out at source, aren’t there all kinds of other deductions, like insurance? (It’s certainly that way in Canada.) The statements will be needed at tax time.
Of course, the whole thing could be (wink, wink) under the table, in which case, if the place gets busted, he’s screwed.
It doesn’t seem like a ‘scam,’ but it is rather flaky. It sounds like he is making your friend an independent contractor if the employer does not take out medicare and social security; this means your friend will pay come April 15. It would be a good idea to start job hunting soon if he doesn’t start getting itemized paychecks and the employer doesn’t shape up. If he decides to stay on, he should consider paying estimated taxes, as well as keeping records of work deductions.
Not so much on your friends part as on his employeer’s part. He should give them a letter, email, something in writing asking when he’s supposed to turn in his tax info and when they will start taking taxes, etc out. I think I’d mention something in it about not being a contractor, day laborer, and the like who are 1099’d and have to pay their own taxes. He needs something in the record someplace that shows he’s trying to do the legal thing so when this falls to shit he won’t be one of those sending their clothes to the laundry.
If it keeps up, start looking. I’d keep working, at least it’s a check. If he gets another job and they never send in a 1099 or report him as an employee, then he’s just a little bit more ahead.
Oh, that’s so not good. First and foremost, your buddy must keep his ass firmly covered. Now is the time for him to call the IRS and ask them some questions about how to keep from going down with his “boss.” And look for another job RIGHT F’N NOW, before the local sheriff comes around to confiscate equipment for non-payment of suppliers (been there, done that, threatened the ex-boss with the government to get my last paycheque).
Don’t deposit the check. Go to the bank the check is drawn on and CASH it. That way you’ll never get hit with a bounced check. If there’s insufficient funds to cash the check the bank won’t give you the money.
Nothing worse than depositing a check and drawing against it, only to find the check bounces, and now all your checks bounce too.
My 75 year old neighbor had gotten a notice from the IRS for not paying taxes for a job. She hadn’t worked for years. Somebody used her Social Security number and had no deductions taken out. She had to deal with the IRS for months and her Social Security benefits were almost dropped. They said she was clear in the end, but wouldn’t tell her who got busted. The owner of the resturaunt knew this lady, and she suspects that he was in on this fraud.
Your friend is going to regret not turning this guy in to S.S. and the IRS right away. The owner is like other shady characters I know of that ended with the employees having to straighten things out with the IRS and S.S., while loosing out on a month of pay.
One thing that your friend can do to protect himself right now is keep very careful records of what he’s been paid, and figure out how much he’d have to pay in social security and income taxes if the job were an independent-contractor type. I don’t recall all the details, but I think an independent contractor is responsible for paying both his share of the social security taxes, and the employer’s share. Plus of course standard income taxes. Then, pay those taxes via quarterly estimated payments. If the employer straightens things out and brings the tax situation current, then whatever the friend has paid can be sorted out on April 15th when he files his real tax return.
Oh, and second/third what everyone else has said, just wanted to suggest your friend protect himself from the wrath of the IRS.
In the event that this really is just a case of a flaky owner, and assuming your buddy thinks he is getting health insurance, he might want to verify with the insurance company that he really is covered. Anyone flaky enough to forget to write a paycheck just might be flaky enough to forget to add the new employee to the insurance.
Your friend should do this immediately: call the state department of labor and tell them what you’ve told us. Then he can follow up & do the same with the U.S. Dept. of Labor and the IRS.
Between the 3 agencies, one of them will surely straighten out his “employer.”
Oh, and he should document everything that’s happened in writing, keep a copy & present copies to any of those agencies that requests them, and keep copies of every bit of written documentation between himself and the “employer.”
He might also contact an employment attorney.
Sorry, but he’s going to have to kiss his “dream job” goodbye, as that asshole needs to be shut down.
the “employer” does not get to classify your friend as an independent contractor (thereby exempting himself from having to withhold taxes, etc.) - there are strict written standards that must be adhered to in order to classify someone that way. I recommend he go to www.dol.gov and/or www.irs.gov and read about independent contractors if he’s in any doubt.
Not to mention that if he’s an independent contractor, that is something that should have been discussed and agreed upon during the interview process. You don’t get hired by a company and find out later that you’re an independent contractor - that changes everything.
I agree with most of the above, but I say wait until the second check comes. It’s possible the guy just is disorganized not a scammer. I can’t see the harm in waiting for another paycheck.
Are there other employees?
And, remember- if you are an employee, and your empoyer doesn’t take out your Payroll taxes, then he’s responsible, not you. OTOH, you are responsible for Income tax withholding. Right now, after 9 months of unemployment, your freind likely isn’t all that concerned about Incomes taxes, sure.
Federal law requires the employer to post in a visible area for employees to see when they are supposed to get paid. If he’s supposed to get paid every three weeks, fine. If he’s supposed to get paid every week or every two weeks, and he had to wait three weeks, something’s fishy and he needs to report this to the department of labor. There’s usually a labor board in every city, or at least every county, so I’d have him check with that.
Fishy payment practices are a big no-no. Screwing the government can get him into a lot of trouble, yes, but screwing the employee just makes you a shitty human being.
