There are some questions that I frequently get from potential clients. This is one:
Q: My employer pays me cash for overtime. Is that legal?
A: Probably not – for a lot of reasons.
First, if the employer is paying you cash, then neither of you is paying the required federal and state taxes and withholdings on that money. That puts both of you on the wrong side of the law.
Second, and most important, if the boss is paying you cash for overtime it is almost because he does not want to pay you the time and a half that the law requires. Some employers will tell you that if you make $10 an hour in wages, $10 an hour in cash is just as good as the $15 an hour in wages that you should get for overtime.
The legal term for that is “bull.” You are better off getting the time and a half, even after taxes are deducted. And as usual, the employer is looking out for himself, not for you. Paying cash saves the employer money and hassle and leaves you with less money in your pocket and less money in your Social Security account.
The Fair Labor Standards Act requires that employers pay covered non-exempt employees time and a half for every hour worked over 40 in a week. Period. There are no exceptions, even if the employee agrees to something different.
The Fair Labor Standards Act requires that employers pay their employees wages – not cash in an envelope, not forgiveness of debt, not “comp time” – wages for overtime at the rate of one and a half times their regular hourly rate. If your employer is not doing this he is stealing from you.