Can an employer legally pay her children as employees if they do not even work in the company?

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Can an employer legally pay her children as employees if they do not even work in the company?

Asked on January 13, 2016 under Employment Labor Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

It is legal since the owner of a company can decide what to do with company money, who to employ and what (if anything) they need to do as part of their "employment", who to pay and how much, etc. A company's owner controls a company and can do pretty much anything she likes with it. Of course, if the children are not actually working for the company, but the company is deducting their "salary" as a business expense, she may be committing tax fraud, but that doesn't change her basis right to pay them--she just should, for her and their safety, make sure she accounts for the payments correctly.


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