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LawTalk
LawTalk, Attorney
Category: California Employment Law
Satisfied Customers: 27881
Experience:  I have 30 years of experience in the practice of law, including employment law and discrimination law.
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I own a bar and my manager recently hired an employee 3 weeks

Customer Question

I own a bar and my manager recently hired an employee 3 weeks on a trial basis. Tonight said employee quit and proceeded to call my manager and state that he wants $20,000 by 10am today because we paid him in cash for the first 2 weeks he worked there or he is calling the IRS. This is blatant blackmail and I am assuming a felony potentially in CA We are literally in the process of changing accountants and he has not filled out a w-4 yet. His total pay is under $500 is possible to 1099 him or something? We have payroll records/payroll tax info for other employees.

I was wondering A) What to tell this idiot? and B) The best way to get him his final pay since I do not have a w-4 for him C) How to go about paying payroll taxes on the amount paid out to him?

Thanks!!!!
Submitted: 1 year ago.
Category: California Employment Law
Expert:  LawTalk replied 1 year ago.

Good morning Angela,

I'm Doug, and I'm very sorry to hear of your situation. My goal is to provide you with excellent service today.

Unfortunately, as the employee was not doing a job that could be classified as an independent contractor.

But the fact of the matter is that it is not illegal to pay an employee in cash. What you will have to do is insure that you withhold and pay to the state and feds the appropriate amount of withholdings. And presuming that you haven't had any need to send in your federal tax deposits and state deposits yet, then this employee really can't do much to get you in trouble. Be sure to add them to the workers compensation policy and pay their unemployment. Also, prepare a payroll "stub" for the employee showing the money you "withheld" for payroll taxes as the law requires.

The demand that you pay the 20K or the employee is going to try and report you for allegedly committing a crime is a felony In CA.

Under CA Penal Code, Extortion is a crime:

§518. Extortion is the obtaining of property from another, with his consent, or the obtaining of an official act of a public officer, induced by a wrongful use of force or fear, or under color of official right.

§519. Fear, such as will constitute extortion, may be induced by a threat, either: 1. To do an unlawful injury to the person or property of the individual threatened or of a third person; or, 2. To accuse the individual threatened, or any relative of his, or member of his family, of any crime; or, 3. To expose, or to impute to him or them any deformity, disgrace or crime; or, 4. To expose any secret affecting him or them.

§520. Every person who extorts any money or other property from another, under circumstances not amounting to robbery or carjacking, by means of force, or any threat, such as is mentioned in Section 519, shall be punished by imprisonment pursuant to subdivision (h) of Section 1170 for two, three or four years.


Offer him the W-4 to fill out---tell him that you have already withheld taxes based on his claiming one, and will refund the remainder (which would be just a few dollars) if he claims more.

As for getting the final pay to him, Count him as claiming only himself, pay him with a payroll check with a proper payroll stub on it and tell him that you are filing a felony extortion report with the police against him. That should shut him up.

Under CA law, he has committed another crime in CA by recording the conversations without the permission of all people in the discussion, in advance of the recording being made. He can be criminally prosecuted by the state for that as well. And the argument can be made that because the recording was illegal, it may not be used as evidence.

The reality is that the IRS and the state are not going to have a problem with this one insignificant lapse with this employee---so long as your business is not doing this on a regular basis. The 2 weeks this guy worked for you is easily handled and the fact that you are in between bookkeepers is a valid reason for being behind.

You may reply back to me again, using the Reply to Expert link, if you have additional questions.

I wish you the best in your future,

Doug


Customer: replied 1 year ago.

Doug,


 


Thank you thank you thank you!!! You were so very helpful and I feel like you just took the weight of the world off my shoulders. I have one more question. Part of his threat was that I call him personally by 10am this morning. I am assuming he will record this conversation, and it is the 1st time I have had any interaction with this person. What should I limit the conversation too? Do you recommend I record it as well but make a statement about the recording at the beginning of the phone call? This guy is just a lunatic so I want to cover all my bases. And once again THANK YOU!

Expert:  LawTalk replied 1 year ago.
Good morning Angela,

You first need to decide if you will speak with him over the phone. You can speak with him, but limit the conversation to what you need to know to get him paid. You have nothing to gain, and you can't control whether he records the conversation. T

As he quit his job with no notice, you have 72 hours to get him his final paycheck. If you do speak with him, ask him if he would like to pick it up at work, or be mailed to him. Be sure to account for all the money paid him to date and withhold proper taxes from his last wage payment based on 1 exemption, and show that you also put money toward FICA, federal and state taxes for the cash that he was paid as well. The stub should cover all the bases. You will actually be overpaying him as you need to cover his taxes on all wages paid to date in cash---but go ahead and take taxes from the wages earned that you have to pay him in his final paycheck.

Don't discuss any of the allegations that he has made, but perhaps inform him that what he has done constitutes a serious felony in CA, and leave it at that. And don't forget that you will need a W-4 from him so you can send in the right taxes based on his wages to date.

Don't record the conversation. You have little to gain and absent his specific consent (you can't just tell him that you are recording) it is illegal to record in CA.

Thank you for your kind words, Angela. They are appreciated. Please keep in mind that until you rate me highly for my service, I will not be credited with helping you.

Thanks again.

Have a great day,

Doug
LawTalk, Attorney
Satisfied Customers: 27881
Experience: I have 30 years of experience in the practice of law, including employment law and discrimination law.
LawTalk and other California Employment Law Specialists are ready to help you
Expert:  LawTalk replied 1 year ago.
Thank you for your positive rating of my service, Angela. It has been my pleasure to assist you and I hope than you will ask for me on JustAnswer should a future need ever arise.

Please feel free to bookmark the following link so you can request me to answer any future legal questions you may have:
http://www.justanswer.com/law/expert-lawtalk/

Thanks again.

Doug

When you receive your Customer Satisfaction Survey from JustAnswer, please do rate me highly (9-10) there as well. It benefits my ability to assist you and other customers, and would be tremendously appreciated.
Expert:  LawTalk replied 1 year ago.
As a follow up, Angela, you might tell the employee that he was paid cash while you were transitioning to a new bookkeeper, and that the company wanted to make sure that he was paid, but that the tax withholdings owed on his income would be paid to the state and feds, as usual. At worst, there is a violation for not giving him a pay stub---hardly worth his going to prison over in the shakedown he is trying.

Have a great morning,

Doug
Customer: replied 1 year ago.

Perfect. One more thing. I am planning on sending the following e-mail to this employee:


 


Mr. W****,



Since you have not filled out a W-4 yet please fill out the attached and scan and email the attached copy by tomorrow so we can get your final pay to you. With this final pay we will also include a paystub which will show that we have already withheld taxes based on you claiming one, and we will refund the remainder if you claim more for the prior pay period.



With the return of this W-4 please let me know where you whether you would like to pick up your final paycheck or have it mailed.



Your cooperation is much appreciated and I would like to avoid filing a felony extortion report with the police.


***********************************************************************************



Is this e-mail better coming from me as the owner or should I have my manager send it since she has had contact with him?

Expert:  LawTalk replied 1 year ago.
Hi Angela,

You cannot withhold his final paycheck while waiting for him to provide the W-4. You can ask for the W-4, but you may not premise his receipt of his paycheck on his submission of it.

You may tell him that upon receipt of his W-4 if you see that he has claimed more than 1 exemption, that you will return the additional withholding to him that he has coming.

As for the mention of felony extortion---the way that you phrase it, it almost looks as though if he doesn't;t do as you have asked---that you will report him. Not a good idea.

If you feel the need to mention the criminal act---then mention it---but not in conjunction with an modifying language such as "if you don't:, "Your cooperation is much appreciated and I would like to avoid filing". Simply state that what he has done in demanding the 20K with the threat that if you don't, he will report an alleged crime, is a felony in CA.

The email (send it snail mail as well) should come from you, the owner. The Manager is not charged with the legal operation of the business, and is not responsible for the tax withholdings of the company. I presume that you are.

Best of luck to you.

Doug

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