Is there any real harm if an employee works "under the table" for cash? Why should they report income that nobody else is tracking?
Aside from the fact that you're legally required to report all your income for tax purposes, unreported income puts you at a disadvantage if you ever get injured on the job and need to obtain workers' compensation benefits.
There are plenty of jobs out there that pay cash -- especially in the restaurant industry or construction. However, anyone who is considering taking a job that's paid totally or partially "off the books" should be asking why an employer is willing to operate that way. It isn't for the benefit of the employees!
Employers will sometimes reduce their tax and insurance liability by simply keeping their payroll as minimal as possible. Unfortunately, that leaves those employees without any workers' compensation coverage if they are injured. When that happens -- which it frequently does in high-risk industries -- employees are left without an income or the medical coverage they need to obtain proper care.
In Maryland, workers' compensation benefits are paid according to your average weekly wage. If you haven't been reporting a significant amount of cash income, the benefit that you stand to receive may be much less than what you anticipate -- and far below your needs.
How can you make sure that you don't fall into between a gap in the system that could leave you without adequate resources if you are injured? Take the following steps:
- Make certain that your employer has you fill out the W-4 and I-9 forms for the purposes of taxation. This is to make sure that your income is reported as wages.
- Review your paycheck each week. Make certain that it correctly reflects the number of hours you have worked and the pay you receive -- including any cash payments for overtime.
If you have a problem obtaining your workers' compensation benefits after an injury due to the way that your employer reported your income, an attorney can help you explore possible avenues to resolve the situation.