Legal Question in Employment Law in California
I work for a firm as a W-2 employee; I reside in CA and my employer is located in WA. I am hourly, not salary, and I submit my time and expense each month to my employer in the form of an �invoice.� The following are relevant sections from my executed Employment Agreement:
1. Fees. Employee shall be compensated for Services at an hourly rate as agreed to by the Parties. Employee shall keep a written record of her time with a detailed description of the work performed and shall submit invoices to Employer in a timely manner.
2. Expenses. Unless otherwise stated in the applicable Statement of Work, Employer shall reimburse Employee for all reasonable and necessary out-of-pocket expenses that Employee may incur in providing the Services under this Agreement. Such expenses will be included in the invoices presented to Employer.
3. Invoices. Employer shall pay amounts payable to Employee under this Agreement within forty-five (45) days of receipt of invoices submitted by Employee.
4. Compulsory Withholding. Employer shall deduct any compulsory withholding and or any other direct expenses associated with this Agreement from the gross fees paid to Employee under this Agreement, including but not limited to both employer and employee portion of social security withholdings.
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Each month my employer provides me with an �invoice� template that I complete. Within this template, there are two specific calculations that determine what would ordinarily be considered Employer Portion of FICA:
Estimated Social Security (6.2% of wages up to max)
Estimated Other - Medicare Tax (1.45% of wages, no max)
These amounts are deducted from my gross earnings by my employer (used to pay the employer portion of FICA) and the resulting amount is sent to a payroll processor who withholds all employee taxes, including my portion of FICA, and deposits my net pay into my bank. As a result, I have paid both the Employer and Employee portions of FICA.
Question is this � even with an executed employment agreement, is it legal for my employer to enforce Compulsory Withholding of the employer portion of FICA as provided in section 4 above?
1 Answer from Attorneys
Yes. It probably is. It's kind of an odd way to do it. Better practice would be to reduce your hourly rate by the necessary amount. As long as your hourly pay, net of what they deduct for employer's employment taxes, is at least California minimum wage, it would seem to be legal.
Just by the way, however, The provisions that they pay you monthly, and not for 45 days after the end of your pay period is TOTALLY illegal. In California, wages must be paid at least twice during each calendar month on the days designated in advance as regular paydays. The employer must establish a regular payday. Wages earned between the 1st and 15th days, inclusive, of any calendar month must be paid no later than the 26th day of the month during which the labor was performed, and wages earned between the 16th and last day of the month must be paid by the 10th day of the following month. Other payroll periods such as weekly, biweekly (every two weeks) or semimonthly (twice per month) when the earning period is something other than between the 1st and 15th, and 16th and last day of the month, must be paid within seven calendar days of the end of the payroll period within which the wages were earned.
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