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.