Learn How Being Paid "Off the Books" Can Hurt Your Claim

Law Blog

It's not unheard of for employers and employees to agree to unconventional payment arrangements. The most common of these involve being paid "under the table" or "off the books". Both are euphemisms that simply mean being paid directly, usually in cash and without any payroll taxes being deducted from those payments. There are plenty of reasons why such an arrangement would exist, but in the end, it could end up being detrimental in the event of a work-related injury.

To find out why being paid under the table could sink your personal injury claim, it's important to know how monetary damages are calculated and the role your payroll records play in determining those damages.

Your Reported Earnings Play a Significant Role

In a personal injury case, one of the biggest factors determining how much compensation you're entitled to is the loss of earnings or earning capacity due to your injury. The damages you'll ultimately receive not only depend on the severity of the injury itself and the circumstances leading up to the injury, but also the amount of income you've lost and how much of your income-earning potential you'll lose for years to come. Depending on the type of injury suffered, this could mean losing upwards to millions of dollars in wage-earning power throughout the remainder of your lifespan.

Analyzing your earnings history is the most effective way for the courts to not only calculate compensation for lost wages, but also to get a clear picture of any future earnings you stand to lose due to the effects of your injury. Your earnings history has to be something that's easily verifiable - properly recorded payroll and tax records are usually the go-to for analyzing earnings.

What Happens When There's No Paper Trail

Employees are often paid without proper documentation due to the following reasons:

  • The employer is actively avoiding its tax obligations or looking to reduce their workers compensation premium.
  • The employees are misclassified as "independent contractors" to prevent them from receiving benefits and other protections.
  • The employees lack documentation to verify their legal status within the country.

Without any verifiable proof of your income and earnings potential, it becomes that much harder to prove your case in court. Most judges are highly reluctant to calculate monetary damages when there's little to no proof of income available. A judge may even decide to throw out any loss of earnings claims that can't be backed up by payroll or tax records.

Being paid under the table can also cast a shadow over your credibility. Claims of illegal activity are quite common among businesses that pay their employees without any traceable records. Without verifiable payroll records, it's easy for the defense to bring your honesty and integrity in question, all based on your failure to fulfill your tax obligations. The jury may get the mistaken impression that you're not to be trusted, which could spell the end of your claim.

The consequences can even extend beyond your personal injury case. If the IRS or your state's revenue authority gets wind of your under-the-table activity, you could find yourself liable for thousands of dollars in back taxes.

What You Can Do

Even when working under the table, you're still entitled to a wide variety of rights and protections that ultimately benefit workers. For instance, you'll always have the right to pursue workers compensation regardless of how your being paid. This depends on the strengths and weaknesses of your state's own labor laws, in addition to federal labor laws pertaining to under-the-table situations.

Ultimately, it's a good idea to get in touch with a personal injury attorney like Thomas A Blake to decide whether you should proceed with your case in spite being paid under-the-table. Your attorney can decide whether it's worth taking legal action as well as the right actions to take in such cases.


4 August 2017