An Uncomfortable Question, But I Have to Ask it.....Techs are Paid, "Off the Books?"

[Joe Marconi]

A shop owner friend of mine recently interviewed a technician he was looking to hire. At the end of the interview, the tech turned to my friend and said, “If I get hired, I would like half cash off the books, and half by check.” My friend replied, "That’s not happening.”

I hope to not sound naïve, but does this still happen?  Please, I have been around for many decades, and years back this was common. But I hope that we have progressed as a profession through the years.  

Tell me I am wrong. Tell me I am right. But tell me how are we ever going to raise the level of professionalism if there are shop owners paying people off the books? 

Doesn’t this also hurt the actual pay scale by lowering it from what it is? How does help to attract new people to our industry?

Please let me know your thoughts on this.

[Transmission Repair]

I never paid anybody off the books.  I did lose a potential hire once for not paying him off the books because he was collecting unemployment.  I agree with you, Joe.

[nptrb]

Well, you don't get quality techs who want to get paid "off the books".

If the potential new hire wants the shop owner to pay them off the books because they're trying to fly under the radar for maybe unemployment, what kind of stunts would they pull on the shop owner?

[SW Car Care]

Absolutely not.  I've had guys sheepishly ask in the past, but they are given the standard response, "If I'm paying my taxes, YOU are going to pay yours!"

[NoticeAutoTN]

No way.  Usually means he's hiding from something and probably isn't to be trusted anyway...we had a local shop for a while paying his guys 1099...which I think is almost as bad..

 

[nptrb]

1 minute ago, NoticeAutoTN said:

No way.  Usually means he's hiding from something and probably isn't to be trusted anyway...we had a local shop for a while paying his guys 1099...which I think is almost as bad..

 

1099 is a tricky slope to manage in the auto industry. I agree with you that it's not a great way to go. 

[Joe Marconi]

45 minutes ago, SW Car Care said:

Absolutely not.  I've had guys sheepishly ask in the past, but they are given the standard response, "If I'm paying my taxes, YOU are going to pay yours!"

Good for you! And you are right on target!

42 minutes ago, NoticeAutoTN said:

No way.  Usually means he's hiding from something and probably isn't to be trusted anyway...we had a local shop for a while paying his guys 1099...which I think is almost as bad..

 

1099?  Seriously! That is just as bad, might be worse! 

[Joe Marconi]

43 minutes ago, NoticeAutoTN said:

No way.  Usually means he's hiding from something and probably isn't to be trusted anyway...we had a local shop for a while paying his guys 1099...which I think is almost as bad..

 

1099?  Seriously! That is just as bad, might be worse! 

[weighit]

All that can so is come back and bite you hard. If that guy was to ever need to collect workmans comp for an injury, guess who he tosses under the bus trying to get his full money.  I gave cash bonus money for Christmas but all paychecks and hours worked was by the book, and checks. issued.

[Joe Marconi]

7 hours ago, weighit said:

All that can so is come back and bite you hard. If that guy was to ever need to collect workmans comp for an injury, guess who he tosses under the bus trying to get his full money.  I gave cash bonus money for Christmas but all paychecks and hours worked was by the book, and checks. issued.

Great point about workers comp. No one enjoys paying taxes, but as you point out the risks are too great, and as I mentioned earlier, how does this help raise the bar for our profession? 

[Transmission Repair]

3 hours ago, Joe Marconi said:

Great point about workers comp. No one enjoys paying taxes, but as you point out the risks are too great, and as I mentioned earlier, how does this help raise the bar for our profession? 

Also, don't forget about Social Security.  People who get paid "under the table" are unknowingly clipping themselves out of a lot of S.S. pay later in life.  Earlier in my career, I worked for a family who would pay us by check but insisted we cash the paychecks with them.  They had a safe in their back office full of cash.

They also had a construction company in Chicago that I now suspect took in a lot of cash, but who knows?  Now that I'm collecting S.S., I've come to realize they weren't reporting my income on the 941.  Thanks to those clowns, I'm now collecting much less S.S. than I should be because they weren't reporting my income.

I came to learn that not reporting all income comes back to haunt a person much later in their life.

[Transmission Repair]

19 hours ago, SW Car Care said:

Absolutely not.  I've had guys sheepishly ask in the past, but they are given the standard response, "If I'm paying my taxes, YOU are going to pay yours!"

That's one of the big reasons why the Democrats wanted to hire 87,000 new IRS agents!  Not reporting income goes on in this country a lot more than we know.  It's rampant.

[Joe Marconi]

34 minutes ago, Transmission Repair said:

Also, don't forget about Social Security.  People who get paid "under the table" are unknowingly clipping themselves out of a lot of S.S. pay later in life.  Earlier in my career, I worked for a family who would pay us by check but insisted we cash the paychecks with them.  They had a safe in their back office full of cash.

They also had a construction company in Chicago that I now suspect took in a lot of cash, but who knows?  Now that I'm collecting S.S., I've come to realize they weren't reporting my income on the 941.  Thanks to those clowns, I'm now collecting much less S.S. than I should be because they weren't reporting my income.

I came to learn that not reporting all income comes back to haunt a person much later in their life.

Another excellent point!

[Transmission Repair]

On 9/20/2023 at 12:30 PM, nptrb said:

1099 is a tricky slope to manage in the auto industry. I agree with you that it's not a great way to go. 

Natalie, early in my career I worked at an auto parts store.  I would hang out with an older guy, Tom Sitka, of Sitka Transmissions to just watch and learn about transmissions.  I wasn't concerned about learning anything other than the technical end of the business.  As it turned out, he had some unpaid 941 taxes and the IRS got involved.  The unpaid 941 taxes were a mere drop in the bucket when compared to all the 1099s he had the majority of his employees on.  In the end, the IRS said he had "misclassified" the majority of his employees.  Long story made short, the IRS padlocked his building and later confiscated all the tools and equipment in the building.  From that point on, he was doing transmissions by himself at his house.  I would help him just to learn but that didn't last as I found a job in a transmission shop.

[weighit]

One of my guys when I owned a body shop did side work for cash doing roofing for a friend of his. I get a call on a Saturday from him in the hospital, he fell off the roof. Wanted to have me tell the workmans comp and insurance that he was working for me in the shop and tripped and fell. He broke bones in his neck, and was going to be out of work for a while. Are you kidding? No way, working for cash has drawbacks and this is just one of them. Some folks can get away with under the table, but when it crashes, it can hurt in more ways than one. 

[Joe Marconi]

1 hour ago, weighit said:

One of my guys when I owned a body shop did side work for cash doing roofing for a friend of his. I get a call on a Saturday from him in the hospital, he fell off the roof. Wanted to have me tell the workmans comp and insurance that he was working for me in the shop and tripped and fell. He broke bones in his neck, and was going to be out of work for a while. Are you kidding? No way, working for cash has drawbacks and this is just one of them. Some folks can get away with under the table, but when it crashes, it can hurt in more ways than one. 

Great story, thanks for sharing. It is hard to believe that this stuff happens.  And to your point, in some way of anther we all end of paying for this garbage. 

[Joe Marconi]

On 9/20/2023 at 2:14 PM, nptrb said:

Well, you don't get quality techs who want to get paid "off the books".

If the potential new hire wants the shop owner to pay them off the books because they're trying to fly under the radar for maybe unemployment, what kind of stunts would they pull on the shop owner?

I agree with you 100%! 

[pfseeley442]

Did it once years ago, worst thing ever, if you can't hide the money you end up claiming the money as income. Lose, Lose,  The most I have ever done resently is given an employee cash for doing some week end work for me. 

[Hands On]

I never felt it was worth it. I did not want to lose all I have built over some tax cheating. There was a fellow one town over from me that started at the exact same time I did. The last I heard he was shut down and kicked out and owed the IRS over 60k in 941 taxes. I am still going strong.

Edited October 4, 2023 by Hands On

[Joe Marconi]

1 hour ago, Hands On said:

I never felt it was worth it. I did not want to lose all I have built over some tax cheating. There was a fellow one town over from me that started at the exact same time I did. The last I heard he was shut down and kicked out and owed the IRS over 60k in 941 taxes. I am still going strong.

 I agree, it is not worth it.  Live your life by ethics, integrity and morals. 

[DUFRESNES]

The only thing I know for sure is   YOU DON'T PLAY AROUND WITH PAYROLL.  You do it the right way always.  It will come back to bite you really bad.

[Joe Marconi]

48 minutes ago, DUFRESNES said:

The only thing I know for sure is   YOU DON'T PLAY AROUND WITH PAYROLL.  You do it the right way always.  It will come back to bite you really bad.

Agree! it always does. 

[Transmission Repair]

On 9/20/2023 at 12:14 PM, nptrb said:

Well, you don't get quality techs who want to get paid "off the books".

Also, you'll never see a long-term employee being paid off the books.  Paying off the books almost automatically induces high staff turnover.  Needless to say, in retirement, a tech's social security payments will be greatly reduced.  People who get paid off the books are not looking to the future. 

For those shop owners who think they can trick the system by paying with a 1099 at the end of the year, I've got some news for you.  When the IRS catches up (and they will) and discovers you misclassified an employee as a subcontractor, the would-be employer is on the hook for ALL the back taxes, including the matching S.S. and F.I.C.A.  It's UP TO YOU AND YOU ALONE to try to recoup from the employee.  Good luck with that one.

[TheTrustedMechanic]

On 9/21/2023 at 9:57 AM, Transmission Repair said:

Also, don't forget about Social Security.  People who get paid "under the table" are unknowingly clipping themselves out of a lot of S.S. pay later in life.  Earlier in my career, I worked for a family who would pay us by check but insisted we cash the paychecks with them.  They had a safe in their back office full of cash.

They also had a construction company in Chicago that I now suspect took in a lot of cash, but who knows?  Now that I'm collecting S.S., I've come to realize they weren't reporting my income on the 941.  Thanks to those clowns, I'm now collecting much less S.S. than I should be because they weren't reporting my income.

I came to learn that not reporting all income comes back to haunt a person much later in their life.

Not to mention if they want to get a bank loan or a credit card or anything that might depend on their "income." Sure, it might feel nice to have that "extra cash," but anyone who wants to or is willing to work "under the table, " or "off the books" is really cheating themselves, including shop owners who skim the cash payments and only report what has a paper trial, ie checks and credit card receipts. I mean, cash payments aren't that big of a piece of the pie, are they? So, what's the big deal if I take the cash from quick jobs, it's not hurting anyone is it? (For the record, all italics are meant SARCASTICALLY and I am in no way advocating it.)

 

[Joe Marconi]

16 hours ago, TheTrustedMechanic said:

Not to mention if they want to get a bank loan or a credit card or anything that might depend on their "income." Sure, it might feel nice to have that "extra cash," but anyone who wants to or is willing to work "under the table, " or "off the books" is really cheating themselves, including shop owners who skim the cash payments and only report what has a paper trial, ie checks and credit card receipts. I mean, cash payments aren't that big of a piece of the pie, are they? So, what's the big deal if I take the cash from quick jobs, it's not hurting anyone is it? (For the record, all italics are meant SARCASTICALLY and I am in no way advocating it.)

 

You bring up great points. To add to your comments, this mindset of hiding cash also gives the shop owner a false sense of financial security, and leading to so many other negative consequences, as you mentioned.