Legal Question in Employment Law in California

I was terminated from my job 3 weeks ago...my company is voluntarily paying a waiting period penalty for not getting my final check to me immediately (I am in CA)...the problem is they are with holding deductions...according to the labor board penalties are not wages and thus not taxable...their HR rep says that the IRS considers this waiting period penalty a back wage and thus is taxable....which is right???


Asked on 2/02/10, 1:41 pm

2 Answers from Attorneys
Elizabeth Karnazes New York Offices of Elizabeth Karnazes

Neither really Call the IRS for a more complete explanation, but it is probably taxable as income.

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Answered on 2/07/10, 2:40 pm
Michael Kirschbaum Law Offices of Michael R. Kirschbaum

It is a penalty, not subject to withholding by the employer. But it is reportable as income by you, so you should be responsible for paying the tax on the penalty for the year in which it is received.

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Answered on 2/11/10, 5:06 pm


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