Unreported employment

Unreported employment, often referred to colloquially as working or being paid under the table or cash-in-hand or as moonlighting (especially in British English), is employment not reported to the state. This is often done by the employer or the employee in order to evade tax or circumvent other laws.

Workers and employers who engage in this practice generally make and receive payments in cash, and the employer often does not check the employee's background or credentials, 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 nations 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 jobs that are paid cash-in-hand include:

• Domestic work, such as housekeeping, babysitting, or foodservice
• Construction work or farm work
• Taxicab service (sometimes known as hacking)
• Various types of self-employment, such as gardening

Reasons

Reasons one may work or pay a worker cash-in-hand include:

• Avoidance of wage garnishment or payment of child support or alimony
• Cheaper labor or avoidance of minimum wage laws
• Convenience
• Criminal record
• Protestation of actions or policies of the governing authorities (see agorism)
• Evasion of insurance requirements
• Avoidance of exceeding allowable income by a person receiving certain benefits, such as unemployment, disability, or public assistance
• Fugitive status
• Illegal immigration status
• Organized crime
• Tax evasion, or evasion of social security related costs
• Tax resistance

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 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.

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, however, Federal authorities have recently begun to crack down on illegal immigrants who are employed by large companies. Additionally, the Federal Government reserves the right to arrest, prosecute, and imprison any person for daring to engage in commerce without the State's approval (which is gained through taxation); the only reason it does not exercise this right is the high cost of prosecution and imprisonment relative to the tax revenue lost through unreported employment.

See also

• Illicit work
• Informal sector
• Underground economy

References

• US Immigration and working under the table