What are my rights regarding termination if I was paid in cash?

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What are my rights regarding termination if I was paid in cash?

My current employer has been paying me cash but deducting for my taxes. However, I just found out that out he has not paid the IRS that money. Now he wants me to get paid on a 1099, yet I don’t think that I should be on a W-2. He is also letting me go because he cannot pay my any longer and I’m not sure I will be eligible for unemployment. What should I do? Can you shed some light on my situation?

Asked on January 20, 2016 under Employment Labor Law, New Jersey

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

1) If you are an employee and not an independent contractor, you are paid on a W-2 basis, not 1099. Most people are employees and not truly/legally independent contractors, and the fact that he withheld taxes--which you for an employee, not an independent contractor--further reinforces that you are an employee.
2) If he withhold money for taxes, he must remit it to the IRS (and, as appropriate, state taxing authorities) for you; if he does not, you could sue him and/or report this to the IRS, etc.
3) If an employee and you are let go other than "for cause" (i.e. not for a crime at work, insubordination, violating intructions or company policy, excessive absenteeism, etc.), you should be eligible for unemployment, though your problem may be proving what you earned and how long you worked if you were paid cash and there are no records. Generally, being let go for economic problems (can't pay for you) would let you collect unemployment. Another problem though may be that if he never made UI contributions for you, it may be difficult to collect.
4) He is allowed to fire you because he cannot, or does not want to, pay you any longer.
You have a potentially complex case, and could be owed a reasonable large sum of money (e.g. the taxes; the UI you should be able to get). It would be a good idea to consult in person, in detail, with an employment law attorney.


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