Is paying employees in cash illegal in the US—myth or fact?

[Millie]

Is paying employees in cash illegal in the US, or is that just a myth? I’ve heard mixed opinions about cash wages and payroll compliance. When is paying employees in cash allowed, and what tax reporting rules must employers follow to stay legal and avoid penalties?

 

[Voila]

Myth—mostly. It is legal to compensate workers in cash in the US, however, it is illegal when employers ignore wage regulations, pay minimum wages/overtime, maintain records and when they are not subject to payroll taxes. Cash payments should also be in accordance to the federal, state, tax regulations.

 

[deepak]

Fact—with conditions. The use of cash payment to remunerate employees in the US is legal provided that the employer records the wages and remunerates the employees by duly complying with the payroll taxes, minimum wage, overtime, and records the wages. It is illegal to pay money under the table to escape taxation or legislation.