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Paying an employee 'on the side'
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Paying an employee 'on the side'
Discuss employment-law issues such as family leave, overtime, disabilities law, harassment, immigration and termination.
One of our departments in our company is General Contracting/Construction. For whatever reason, we paid an employee a serious of checks to remodel our office building. This is what he is employed by u
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Forums » Topic Forums » Legal Forum » Paying an employee 'on the side'
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Paying an employee 'on the side'
posted at 9/9/2011 7:31 AM EDT
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Posts: 17
First: 6/4/2010 Last: 9/14/2011 |
One of our departments in our company is General Contracting/Construction. For whatever reason, we paid an employee a serious of checks to remodel our office building. This is what he is employed by us to do, yet we paid him after hours on his own time to do that for our building and didn't process payment through payroll.
Can we legally do that? PS. We are not issuing him a 1099 either, even thought the amount it well over $600. We operate in Michigan, if it matters. Please advise. |
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Paying an employee 'on the side'
posted at 9/9/2011 7:57 AM EDT
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Posts: 562
First: 11/12/2009 Last: 9/14/2011 |
No, you can't. The work he performed was work he would normally do for you. If it was after hours as you say, I'm assuming that this work would've been in excess of the 40 hours per week. If he is a non-exempt employee, those hours would've been subject to overtime rates.
That pay would have, regardless of FLSA status, also been subject to statutory withholding taxes. So you're probably in violation of both state and Federal wage and hour laws. And your company is most assuredly in violation of tax and withholding regulations. |
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Paying an employee 'on the side'
posted at 9/9/2011 8:53 AM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
Krispy
This is very similar to the posting you had where you paid someone else for work they did not do. These are very serious lack of proper controls on your compensation payments. Again I advise you to immediately alert your legal counsel with a full explanation and ask them how to proceed. You should certainly advise them of all the issues that Nork has alerted you to, suggest a course of action and ask if this is how they want it handled. |
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Paying an employee 'on the side'
posted at 9/9/2011 9:21 AM EDT
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Posts: 2442
First: 2/12/2000 Last: 9/14/2011 |
In that case you need to immediately seek new employment as they will drag you down with them when the fit hits the shan.
Keep a detailed time log and writeup regarding each issue, what you advised them, when you advised them and their responses. You might also want to do some research around the whistleblower rules to see if you can win an award if you turn them in at some point. Of course be careful about this. |
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Paying an employee 'on the side'
posted at 9/9/2011 9:28 AM EDT
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Posts: 1771
First: 10/24/2002 Last: 9/14/2011 |
In Canada, legislation is passing soon where HR professionals will lose their professional designations (and therefore their rights to work as HR professionals) if they DON'T blow the whistle on their employers' illegal activities. This may come to the US some day... |
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Paying an employee 'on the side'
posted at 9/9/2011 9:39 AM EDT
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Posts: 562
First: 11/12/2009 Last: 9/14/2011 |
Krispy:
The advice to get out now is right on. If you don't and this all blows up, you might be the scapegoat. The advice to keep a notebook of all these shenanigans is right on - if you can show that you advised the owners properly and they still ignored your advice, then you might be off the hook and increase their liability. Also note that if this does blow up and becomes public, your HR career is toast. |
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Paying an employee 'on the side'
posted at 9/9/2011 3:31 PM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
I would document any responses to them through email that shows the date and the time. BCC them to a personal email account. If it is a verbal conversation, come back and IMMEDIATELY document it in an email. Later it can be used and is NOT considered "hearsay" because it was your documented thoughts at that specific time, not your current remembrances of your previous thoughts. (My boss is an attorney and is very adamant on this point of documentation).
I am lucky to work for a company that believes in staying on the correct side of the line in FLSA and pay issues. I can't say I would stay at one that didn't. Mostly because if they cross the line in this area, they are more than likely doing it elsewhere also. |
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