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Employer paid penalty California

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  • Employer paid penalty California

    Ex-employee filed wage claim and it was decided in their favor. They were paid their back wages via a paycheck which was taxed and on their W2. The penalties the employer owed was reported on a 1099 misc in box 7.
    Are employer paid penalties taxable wages?

    Sharon

  • #2
    Was this the penalty for late payment of final pay?
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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    • #3
      Kind of. The employee had notified the employer about the incorrect pay occuring prior to terming. They blew the employee off so ex-employee pursued thru labor court afterwards. Ex EE was awarded missing wages plus penalty.

      Comment


      • #4
        There is a complication and that is that the IRS and CA rules apparently do not agree. I read in a 2005 BNA newsletter that IRS issued a "information letter" specifically addressed to the CA meal penalty (which CA does not consider to be wages but which IRS does). The specific reference to the IRS "information letter" was not mentioned but in the letter IRS specially cited IRS Revenue Ruling 76–217 and CA labor code 226.7. CA would consider such payment to be income (1099).
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)

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        • #5
          The employee was paid the meal penalties on a regular paycheck that was taxed correctly. The employer was then fined for not paying the employee in a timely manner. The fine was paid to the employee thru accounts payable on a 1099 misc. I can't see how the fine $$ should be taxable to the ex employee?

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          • #6
            IRS apparently does not agree with you. Cash is almost always taxable. The only real issue is whether it is wages (W2) or income only (1099). IRS considers this to be wages. CA considers this to be income, but what CA thinks only applies to CA specific wages such as SDI, SIT or SUTA.

            I understand that this is not the answer that you are looking for.
            "Reality is that which, when you stop believing in it, doesn't go away".
            Philip K. **** (1928-1982)

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            • #7
              I have been at my job for over 2 years. I work over 6 hours almost every day, and not ONCE have I received my break, and don't really remember it being offered in any way.

              How does one go about filing a wage claim against my employer seeking reimbursement for these missed breaks? Has anyone been through this process before? Or know of anyone who has?

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              • #8
                The following are CA rules only.

                http://www.dir.ca.gov/dlse/FAQ_MealPeriods.htm

                http://www.dir.ca.gov/dlse/FAQ_RestPeriods.htm
                "Reality is that which, when you stop believing in it, doesn't go away".
                Philip K. **** (1928-1982)

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