Unreported employment
Encyclopedia
Unreported employment, often referred to colloquially as working or being paid under the table or cash-in-hand, is employment
that is not reported as required by law to the appropriate local, state or provincial, or national government agency. This is often done by the employer or the employee in order to dodge one or more laws in one of these jurisdictions. Workers and employers who engage in this practice generally make and receive payments in cash, and often, the employer does not check the employee's background or credential
s as is sometimes required by law or otherwise expected by the industry's client base, such as a license
or certification
. While the hiring of the employee may or may not be legal in itself, this is often done when the employer or the employee is intentionally failing to obey one or more laws.
In developed countries
unreported employment is a characteristic of the informal sector. This is hidden from the state for tax, social security or labour law purposes but is legal in all other aspects.
s that are performed under the table include:
A UCLA study showed that a weak economy in the state of California
was the result of more than two million workers who were receiving their pay off the books without paying taxes.
Many of those who are employed under the table, including illegal immigrants, may be denied rights that employed persons have, such as minimum wage
, various benefits, and fair treatment.
Under-the-table employees who lose their jobs
may not be entitled to collect unemployment benefits.
In the United States
, however, federal authorities in recent years have been cracking down on illegal immigrants who are employed by large companies.
Employment
Employment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as:- Employee :...
that is not reported as required by law to the appropriate local, state or provincial, or national government agency. This is often done by the employer or the employee in order to dodge one or more laws in one of these jurisdictions. Workers and employers who engage in this practice generally make and receive payments in cash, and often, the employer does not check the employee's background or credential
Credential
A credential is an attestation of qualification, competence, or authority issued to an individual by a third party with a relevant or de facto authority or assumed competence to do so....
s as is sometimes required by law or otherwise expected by the industry's client base, such as a license
License
The verb license or grant licence means to give permission. The noun license or licence refers to that permission as well as to the document recording that permission.A license may be granted by a party to another party as an element of an agreement...
or certification
Professional certification
Professional certification, trade certification, or professional designation, often called simply certification or qualification, is a designation earned by a person to assure qualification to perform a job or task...
. While the hiring of the employee may or may not be legal in itself, this is often done when the employer or the employee is intentionally failing to obey one or more laws.
In developed countries
Developed country
A developed country is a country that has a high level of development according to some criteria. Which criteria, and which countries are classified as being developed, is a contentious issue...
unreported employment is a characteristic of the informal sector. This is hidden from the state for tax, social security or labour law purposes but is legal in all other aspects.
Work types
Common types of jobEmployment
Employment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as:- Employee :...
s that are performed under the table include:
- DomesticDomestic workerA domestic worker is a man, woman or child who works within the employer's household. Domestic workers perform a variety of household services for an individual or a family, from providing care for children and elderly dependents to cleaning and household maintenance, known as housekeeping...
work, such as housekeeping, babysittingBabysittingBabysitting is the practice of temporarily caring for a child on behalf of the child's parents. Babysitting is commonly performed as an odd job by teenagers for extra money.-General:...
, or foodserviceFoodserviceFood Service or catering industry defines those businesses, institutions, and companies responsible for any meal prepared outside the home... - ContractingGeneral contractorA general contractor is responsible for the day-to-day oversight of a construction site, management of vendors and trades, and communication of information to involved parties throughout the course of a building project.-Description:...
work - TaxicabTaxicabA taxicab, also taxi or cab, is a type of vehicle for hire with a driver, used by a single passenger or small group of passengers, often for a non-shared ride. A taxicab conveys passengers between locations of their choice...
service (sometimes known as hackingIllegal taxicab operationWhile most jurisdictions require taxicab operators to be licensed, many unlicensed cabs are in operation. Some of these are marked taxi vehicles , and others are personal vehicles used by an individual to offer unauthorized taxi-like services...
) - Various types of self-employmentSelf-employmentSelf-employment is working for one's self.Self-employed people can also be referred to as a person who works for himself/herself instead of an employer, but drawing income from a trade or business that they operate personally....
Reasons
Reasons one may work or employ a worker under the table may include:- Avoidance of wage garnishmentGarnishmentA garnishment is a means of collecting a monetary judgment against a defendant by ordering a third party to pay money, otherwise owed to the defendant, directly to the plaintiff...
or payment of child supportChild supportIn family law and public policy, child support is an ongoing, periodic payment made by a parent for the financial benefit of a child following the end of a marriage or other relationship...
or alimonyAlimonyAlimony is a U.S. term denoting a legal obligation to provide financial support to one's spouse from the other spouse after marital separation or from the ex-spouse upon divorce... - Cheaper labor or avoidance of minimum wageMinimum wageA minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
laws - Convenience
- Criminal recordCriminal recordA criminal record is a record of a person's criminal history, generally used by potential employers, lenders etc. to assess his or her trustworthiness. The information included in a criminal record varies between countries and even between jurisdictions within a country...
- Protestation of actions or policies of the governing authorities (see agorismAgorismAgorism is a political philosophy founded by Samuel Edward Konkin III and developed with contributions by J. Neil Schulman that holds as its ultimate goal bringing about a society in which all "relations between people are voluntary exchanges – a free market." The term comes from the Greek...
) - Evasion of insuranceInsuranceIn law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
requirements - Avoidance of exceeding allowable income by a person receiving certain benefits, such as unemployment, disability, or public assistance
- FugitiveFugitiveA fugitive is a person who is fleeing from custody, whether it be from private slavery, a government arrest, government or non-government questioning, vigilante violence, or outraged private individuals...
status - Illegal immigrationIllegal immigrationIllegal immigration is the migration into a nation in violation of the immigration laws of that jurisdiction. Illegal immigration raises many political, economical and social issues and has become a source of major controversy in developed countries and the more successful developing countries.In...
status - Organized crimeOrganized crimeOrganized crime or criminal organizations are transnational, national, or local groupings of highly centralized enterprises run by criminals for the purpose of engaging in illegal activity, most commonly for monetary profit. Some criminal organizations, such as terrorist organizations, are...
- Tax evasionTax evasionTax evasion is the general term for efforts by individuals, corporations, trusts and other entities to evade taxes by illegal means. Tax evasion usually entails taxpayers deliberately misrepresenting or concealing the true state of their affairs to the tax authorities to reduce their tax liability,...
, or evasion of social securitySocial securitySocial security is primarily a social insurance program providing social protection or protection against socially recognized conditions, including poverty, old age, disability, unemployment and others. Social security may refer to:...
related costs
Harm caused by unreported employment
Unreported employment can have various harmful effects on society.A UCLA study showed that a weak economy in the state of California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
was the result of more than two million workers who were receiving their pay off the books without paying taxes.
Many of those who are employed under the table, including illegal immigrants, may be denied rights that employed persons have, such as minimum wage
Minimum wage
A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...
, various benefits, and fair treatment.
Under-the-table employees who lose their jobs
Firing
Dismissal is the termination of employment by an employer against the will of the employee. Though such a decision can be made by an employer for a variety of reasons, ranging from an economic downturn to performance-related problems on the part of the employee, being fired has a strong stigma in...
may not be entitled to collect unemployment benefits.
Enforcement
Very often, when an employee is working under the table, an employer is hiring employees to do so, or a person is running an unreported cash-based business, detection by authorities is difficult, and many such operations take place without any attempts to prosecute. Some examples may include one who mows lawns in a neighborhood or the rental of a portion of one's house.In the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, however, federal authorities in recent years have been cracking down on illegal immigrants who are employed by large companies.