my boss pays me an extra $500/month from her own money — but didn’t pay me this month

by Alison Green on November 8, 2021

A reader writes:

I have been in my current position for about two years now. As the pandemic has eased and the job market opened up, a vast majority of my colleagues at my level have left for other companies, meaning that I am one of the employees who best knows the ropes and has been here longest. I recently asked for a raise to reflect my experience compared to my recently hired coworkers and my time at the company.

My supervisor told me that my raise request was not approved for a variety of reasons unrelated to my performance. However, she sensed that this would likely cause me to look for work elsewhere, so she offered to directly pay me $500 on top of my regular salary each month. I voiced my concerns about this arrangement (issues could arise if I’m ever looking for another raise at this company as my base salary has officially stayed the same, I am not sure how this affects my taxes, and I’m worried it will create an uncomfortable dynamic between us) but ultimately, I accepted her offer. Since we came to this agreement, I have learned from some of my coworkers that many people have this arrangement with their direct supervisors at my company.

Everything was fine for a few months. However, this month, she did not pay me. Things have been stressful at work, so I’m unsure if she has simply forgotten or if she is somehow unhappy with my performance and decided I do not deserve this extra money. $500 is a big chunk of my rent and, though I’ll be fine, it will obviously affect my finances in the future if she continues to not honor the agreement we came up with.

I’m just not sure what to do here. Any suggestions on how to ask if our strange arrangement still stands without seeming greedy or opening another can of worms?

Oh my goodness. This is not okay! It’s a cesspool of problems:

1. You probably have no way to enforce this agreement with your manager! If she decides to stop paying you or becomes sporadic about it, what’s your recourse? If your company stopped paying you or didn’t pay you on time, you’d be able to file a wage claim with your state. If your manager does that, you have about the same recourse you’d have if a friend promised you money and didn’t come through — which is not a lot. If you have a written agreement, in theory you could take her to small claims court … but it doesn’t sound like you do have a written agreement and taking your boss to court doesn’t generally lead to awesome outcomes if you’re continuing to work under her.

2. You owe taxes on that money. Is she going to send you a W2 in January that’s separate from the one your company sends her? And are you prepared for how much you’ll owe on it since she’s presumably not taking taxes out? Or is the money under-the-table and not being reported, which is illegal?

3. Since that money isn’t being reported as part of your official wages, it won’t count if you need to file for unemployment in the future (your unemployment benefits are generally based on your last salary). It also won’t be reported toward your Social Security earnings.

4. You’ll have no proof of that income for situations that require income verification, like getting a mortgage or renting an apartment.

5. What if your boss leaves her job? Her replacement is unlikely to agree to fork over $500 of her own money (!) every month, so you’ll have a sudden pay cut.

6. What happens if you have a bad month — make some mistakes, mess up a project? Hell, what if you just take a bunch of vacation or sick leave? Is your boss going to decide you haven’t “earned” an extra $500 from her wallet that month and decline to give it to you (something your letter suggests could happen)?

7. It’s shady as fuck.

The fact that there are apparently multiple managers doing this at your company is incredibly odd! This is not how work works. This is not how pay works! Why are multiple managers there willing to dig into their own wallets to pad their employees’ salaries? I’m guessing no one in Finance, Legal, or HR at your company knows what’s going on, but if they do and just look the other way, that should set off major alarm bells.

Something Is Not Right.

You can’t keep relying on this arrangement for all the reasons above.

As for what to do right now, though … well, she did promise you payments and hasn’t sent the latest one, so if you want to address it, I’d just do it very straightforwardly: “You normally send me a monthly payment by the 1st of the month but I haven’t received it yet — should I have?” But please start actively working on leaving this job.

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{ 317 comments }

{ 317 comments… read them below }

    5. Zennish*

      Yeah, when the reasons that come to mind for a business practice are things like “The company is run by the Mafia” or “The company is a front for a drug cartel” it’s probably time to seek alternative employment.

      1. Curious*

        Umm, in those cases, you want to be careful — as the employers may have more … serious … “termination” policies …

        1. Le Sigh*

          Yeah if it’s the mafia it’s still shady but I mean, it’s the mafia. I’m not a mafia scientist but I’d assume you go in expecting that sort of thing.

            1. Le Sigh*

              Honestly kind of surprised there isn’t yet a CBS procedural called “The Mafia Scientist.” Or maybe that’s more Lifetime….BRB working on a job description and script.

              1. Hexiva*

                I’m picturing a mad scientist making comic-book style superscience for the mafia, and a tone something like Riverdale where it /nominally/ takes place in our reality but bizarre stuff is happening at every turn.

      3. Green Beans*

        Mafias and drug cartels tend to run squeaky clean companies, at least the high level ones! don’t want to get scrutinized by the IRS when you’re hiding illegal activities.

          1. it's-a-me*

            The only thing worse than breaking another law while you’re breaking the first law, is those people who call the police for someone else’s crime while they themselves are on the wanted list.

      1. Sasha*

        Yep – I would also worry that this $500 may not have been coming out of your boss’s earnings and might have been extracted from the company some other way. Such as, out of the petty cash, or by submitting false expenses.

        Your boss would have to be very well-paid to not miss $500 of their own net income each month. Which makes me think it has come from somewhere else, and they weren’t able to access it this month.

    7. Keymaster of Gozer (she/her)*

      Yeah.

      A former firm (very small place) started paying me ‘directly from their own personal accounts’ because of some kind of ‘banking problems’ and…then stopped paying me at all. Turns out also they HADN’T been reporting any of the pay to the tax office (and HMRC are quite nasty about that) and that was the *start* of the problems I had.

      (That was the firm BTW that I ended up giving evidence against at the high court. Shady AF doesn’t even begin to cover it)

        1. Keymaster of Gozer (she/her)*

          They ended up being done for running a Ponzi scheme, defrauding millions of pounds. I…was their head of IT and turned over a lot of info to the authorities. What followed was a year of stress, hiding from the press, stuff that whistleblowers often face.

          And I’d do it again.

          1. OolonColuphid*

            Has your whistleblower status had any negative effects on your ability to find employment?

            1. Keymaster of Gozer (she/her)*

              I can’t put my time there on my CV, there’s absolutely zero chance of a reference, it definitely doesn’t look great for someone in IT to turn on their employer…

              So I don’t mention it. That means a longer period of unemployment to explain away than I actually had. It’s lying, but a sort that I’m comfortable with.

    9. Catalin*

      Dear LW,
      Alison almost never says “This is shady as fuck” and there is some SERIOUS crackers banana pants stuff discussed on this site. Think of this as the tornado siren of your professional world. This is BAD.

      1. Recruited Recruiter*

        Dear LW,
        I have never seen Alison say “This is shady as fuck” before. See Catalin’s notes above.

    12. Sola Lingua Bona Lingua Mortua Est*

      “It’s shady as fuck”

      #7 should be #1. I’m debating if there should actually be 10 reasons instead of 7 and the first four all be It’s shadier than fuck.

    13. BayCay*

      Just because I’m curious…how can the LW report this income legally now? I’m assuming they’d have to report it as misc income, but they couldn’t report it as independent contractor pay right? Because that would still require a 1099 form from the employer, correct?

      I’m just confused as to how they could possibly report this income legally without lying about *which* employer it came from? Wouldn’t report it as side pay from her main employer raise eyebrows from the IRS? (like, why isn’t this on the main W-2?)

      2. Nanani*

        Could they report it the same way as any other informal income?
        If they were giving piano lessons to the boss’ child and getting paid cash, how would that be reported?
        You wouldn’t get a W-2 from a client like that but that money definitely belongs on your taxes – just like tips, self-employment income, and so on.

        1. Nanani*

          To be clear I’m not saying this situation is equivalent to normal non-salary income. ITS NOT
          But LW may need to do some ass-covering on their tax filing and that might be a good angle to approach the problem from.

    16. Paige*

      Every time some politician pontificates about “businesses being the backbone of society, how dare we impose any rules or regulations” or whatever, I remember reading about companies doing idiotic things like this. I am unimpressed, to say the least.

  2. A Pinch of Salt*

    1st time I get here before a slew of comments and I can’t even put words together. Still trying to pick my jaw up from the floor.

    1. Seeking Second Childhood*

      Ayup. There’s a huge gap between management pay and employee pay if a supervisor can subsidize team members. Red flag. Run like the wind!

      1. Anonymous pineapple*

        I wonder if manager raises are being approved while other employees are given “reasons”.

        1. NoNotNan*

          This happened at my old employer, minus bosses paying us out of pocket. There was a pool of bonus money and we later learned that if we didn’t receive our total bonus, say $1,000/month for certain metrics, the money was still allocated to our group, so the manager got it in some BS accounting. So the person determining our productivity and attainments of KPI benefited by poorly assessing our performance.

          Someone discovered the budget for bonuses was actually $1,200/month and the manager never even started on the level. He was skimming $200 from each of our potential bonus even if we exceeded metrics astronomically.

          1. MissBaudelaire*

            There was a woman I knew of who worked at a nursing home. Turned out if there was anything left from their budget in terms of scheduling/overtime/money they hadn’t used for replacing items and equipment, whatever, it turned into a bonus for the supervisor.

            But then, of course, the next year her wards budget was smaller because, well obviously they didn’t need the money!

            I could not make sense of it. It seemed shady and gross and rewarded the supervisor for short staffing.

              1. 2cents*

                The first thing that came to mind when reading that comment was the surplus episode. It’s *exactly* the same plot.

            2. Susan Ivanova*

              Government jobs are notorious for cutting the budget next year if it wasn’t spent this year, so the end of the year sees a lot of office supply purchases.

              1. WS*

                Yes, that’s totally normal, but doesn’t usually involve the leftover money going to the supervisor!

      2. Hannah Lee*

        SSC, that was my first thought as well.

        I had one job where the Director paid me a lump sum out of his pocket twice, each time as a “bonus” bonus on top of whatever I’d gotten that quarter/year.

        The first time, at first I was like, hey cool $2500! But after I thought about it, and thought about the quarterly bonus structure at my company, it dawned on me that the only reason he’d been willing to do that is because he got a giant bonus himself based on the project I worked on, or his base salary was so much greater than mine that $2500 was NBD to him. Him forking over money to me out of his own pocket meant at least one of several things was true: the company’s compensation policies were set up to reward upper management out of balance with other employees, he wasn’t willing to advocate for me to receive compensation commensurate with the contribution I was making and/or he / management weren’t willing to set any precedent for employees making above board bonuses based on their effort/contributions … they’d do a one-off, but didn’t want people to expect something like that in similar situations.

        I took the checks and cashed them, but it did NOT make me think better about the company or my boss.

        Not surprisingly, when I decided to leave that company, the last straw was a situation where I clearly wasn’t being compensated fairly: my boss told be about the big promotion I’d been approved for and how great it was and I’d really been doing the higher level work for months already, but that I was only going to be paid 70-80% of what other people in that job were making because of ‘reasons’ (that didn’t make any sense and sounded very much like “we’re low-balling you because we think you’re a loyal hard working woman who will just be happy with the title change and not complain that we’re treating you unfairly because hey “promotion!” and “we are saying attagirl words at you to make it sound like we think you’re a great employee and we really value you!” )

      3. EPLawyer*

        ehh, that’s true most companies. There is a difference in pay. No idea HOW many people she is subsidizing. But if its only 1, a $500 a month difference in pay is not that much.

        The BONKERIEST part of this is that its a GENERAL PRACTICE at the company. Like no one says “hey we could get in trouble to the IRS and Dept. of Labor” doing this. Do they NOT have HR, Accounting or a Legal Department?

        OP, this place is full of bees waving HUGE RED FLAGS at you, GET OUT. GET OUT NOW.

        2. Anonybonnie*

          $500 monthly difference in pay isn’t that much between a supervisor and their report, exactly, but deciding she’d rather pay $6000 a year out of pocket rather than 1) find and train a new employee and/or 2) look for a new job somewhere her reports are fairly compensated by the company, suggests the supervisor is getting a whole lot more from her job than OP is.

    2. Where’s the Orchestra?*

      Seriously time to get all your ducks in a row and get to a company that will pay you that additional money ON YOUR PAYSTUBS! And especially for all the tax implications that Alison mentioned. I know just leaving isn’t easy – but start applying for everything that you qualify for – this company sounds like a flaming dumpster fire.

      1. Momma Bear*

        I actually wouldn’t pursue the $500 going forward unless it came through official channels. Deal with what you have in hand (and the taxes on it) and get out of there.

        1. Nope*

          Yes agree! I was surprised by that last part. Definitely don’t ask for this money anymore and definitely start looking!

    5. Le Sigh*

      This feels like a future update that ends in the LW having to provide evidence in court/to state agency.

  4. Bumblebee*

    This sounds absolutely insane. I cannot imagine any situation where my manager would offer to pay me privately! I can’t see any benefit to either party here.

    2. The New Wanderer*

      And not just a one-off but apparently multiple managers are doing this! I would guess as many people started looking for new jobs because of the extreme shadiness as because of the extreme insecurity of the payment scheme.

      OP, use any of these reasons but start job hunting now!

      1. Librarian of SHIELD*

        And once you’ve got a new job, schedule an exit interview with HR and possibly legal to let them know about these on the side arrangements their managers have with staff.

        1. Hannah Lee*

          I’m betting they already know, and are turning a blind eye to it because of “reasons”

          Could be anything from playing games with financials (thousands of dollars a year in “expenses” aren’t showing up anywhere, meaning financial statements look ‘better’) to trying to externalize costs, or a fundamental set of values while thinks it’s ok to screw ‘worker bees” and let all the mucky mucks rake in the cash.

          1. Amaranth*

            I’m trying to wrap my brain around what this could be hiding. I suppose it could be upper management who think ‘lower ranks’ are already overpaid, but if so many managers are dipping into their own pockets, then as a group I’d think they could advocate to get that money disbursed legally. At least *somebody* has to realize the legal ramifications for the company and every level of employee. Maybe OP’s manager is also being paid under the table? Does this company legally exist?

            1. Koalafied*

              My first thought is it would be a great way to conceal that you’re paying people unfairly on a discriminatory basis, if on paper everyone appears to be make the same salary, but under the table managers are giving an extra $1k to some, $500 to some, and $0 to some every month. Especially with it being so widespread, I can see it being an issue like, “Management says we can’t officially do merit-based raises because everyone has to make the same salary for equity reasons, but they also know that we want to be able to retain our best people, so they’ll funnel money through us to be able to give retention raises/bonuses discreetly.” Wouldn’t be surprised if these out of pocket payments do end up getting submitted for reimbursement under some vague line item description – then managers aren’t being taxed on it because it’s a reimbursement rather than additional pay.

            2. Observer*

              There a bunch of expenses that are directly tied to people’s pay rate – SUI, Disability (in many cases), Social Security are the ones that come to mind. If you do this to enough people, it adds up.

        2. Observer*

          Oh, they know.

          If you want to try to mess them over, put it in email. But before you do that declare it in your tax return and pay the taxes (and penalties, if it’s more than a year).

      2. So they all rolled over and one fell out*

        It’s one thing if the team lead takes the team out for a celebration dinner on their own dime. Multiple managers paying employees cash literally out of their wallets is absolutely insane.

    3. Distressed Llama*

      The possibility of this even being a quid pro quo situation, boggles me. Like a manager coming up to an employee asking for “favors” (shady or otherwise) because they are paying $500 of their paycheck to the employee under the table. Yikes!

      1. ChrisZed*

        I’m wondering… do these managers/supervisors simply have a department budget, pay themselves huge salaries out of that budget, and as long as the work is done the higherups don’t question them? So any raise requests are simply “not approved”, with no further explanation, and people who leave are replaced. But now too many people are leaving and the work is NOT getting done and the managers have come up with this pay cash scheme to try and save the situation?

        1. Lucious*

          My read : the LWs “company” is probably a fraudulent enterprise. Perhaps it’s a shell company, a tax dodge, a money laundering cover operation, or subsidiary of a parent company using LWs firm to hide the parent company’s expenses Enron style.

          Paying employees out of the managers salary is a good way to hide/disguise rising payroll expenses , and I can think of no legitimate reasons why a company’s accounting team would do that.

          LW needs to make copies of every payroll and employee document with their name on it NOW- and depart for a different employer ASAP. LW should also make copies of those docs and keep them in a very safe place, because there’s a decent chance a regulator(s) may come calling.

    4. Bumblebee*

      I also don’t understand how these managers are affording it! Do they get these extra secret payments as well? How many levels up does it go?

      1. SomebodyElse*

        My guess… (and this is a total guess at this point)
        1. the company has some weird cutoff on who gets raises and/or bonuses
        2. the managers have zero control over this
        3. the managers know the only way to keep good employees is to convert their raise/bonus/salary into higher wages for their employees.. i.e. I got a $6K bonus this year, I’ll give it to Jane.

        So yes, this is terrible for everyone except the company. Not only is the manager opening their wallet to the employee, but they are paying taxes for the privilege of doing it. Remember, they are paying income taxes on that $6K, and opening themselves up to tax fraud liabilities on a personal level.

        The OP needs to get out as soon as possible and tell their manager to do the same (after they secure that new job). This is so terrible.

    7. Meep*

      My Toxic Coworker did this a few times using Amazon Giftcards (that she charged to the company as “client gifts”) to get around visa/green card applications. She was about as open about it as this company seems to be and actually openly discussed it in a meeting with EVERYONE.

      She doesn’t have an ethical bone in her body, though, and would be a slimy corrupt politician in another life.

      The people who took her up on her offer were the ones I always side-eyed more. I get wanting to be paid, but just look for another job who will sponsor you and insure you aren’t going to get kicked out of the country for visa fraud, dang it!

      1. Well...*

        IDK, as someone who has lived and worked in other countries, I’m not exactly familiar with all the laws of the places I’ve worked. At first everything is so unfamiliar that you lean a lot on trusting the mechanisms of your employer to navigate bureaucracy (esp if it’s all in a different language!). Employers who sponsor people on visas should strive to be trustworthy. They hold all the cards/knowledge/power. I’d side-eye the manager wayyy more.

        1. ForeignLawyer*

          Whatever the manager was doing with the Amazon gift cards is definitely a thousand times more dodgy than anything the foreign workers could be doing, but frankly, I can’t see how one could get paid in gift cards anywhere in the world and not at least raise an eyebrow.

          If it was just ‘topping up’ their pay, though, I can see how employees could have thought it was normal. I’ve gotten a lot of perfectly legal and common employment benefits abroad that would have been extremely strange in the country I come from. On the other hand, visa rules rarely put a maximum cap on foreign workers’ pay, only a minimum, so I can’t see what the point of the scheme would have been in that case.

    8. Malarkey01*

      My sister had something similar happen, it was a big law firm where partners brought home seven plus figures a year. Their individual EAs were paid directly by the firm, but there were some that were really really invaluable and the firm kept everyone salary banded and unable to give big performance based raises. So some of the partners gave “appreciation bonuses” out of their own pockets to keep their EAs from leaving on top of the paychecks.
      Still SHADY AF, but that’s one example of why this could be prevalent.

    9. Ann O'Nemity*

      I’d guess the manager is doing this temporarily to keep the OP long enough to get replacements onboarded and up to speed. The manager may have decided that $1-2k out of their own pocket is worth it for their own work-life balance, especially if the manager is very well-compensated. I can’t imagine that the manager is planning to do this forever though.

  5. NoviceManagerGuy*

    Point number 7 all the way – you want to avoid getting involved in shady things as much as possible. This probably isn’t the only bonkers thing happening at your employer!

  6. Sara*

    It is SO WEIRD that multiple managers are doing this. How did that become the norm?! If you got promoted, would you be expected to do this as well?

    I say run far and fast.

    1. lex talionis*

      If multiple managers are doing this maybe they are expensing the money? Still a hotbed of potential problems and not a good idea.

      1. Meep*

        That was my thought. Recurring expense report deposit from department funds. Just say “general expenses” and you are good to go!

      2. Not Tom, Just Petty*

        Like a slush fund. But how does OP report it?
        As a bonus? Isn’t that taxed higher?
        Is it a personal check, cash transfer from manager to OP?
        More curious than serious here, but can someone explain to me:
        Does OP have to report this as income?
        Can she say it’s something else like a raffle prize or profit from sale of bowling balls?
        I just cannot get my head around my boss telling me, here’s three grand. Best of luck to you.

    2. Heidi*

      So many questions. How are these bosses paying this money? Venmo? Cash? I guess I’m wondering about the record-keeping aspect of it all if this were investigated. Could the boss just say, “I’m just giving this money as a gift and it’s not contingent on employment?”

      1. DANGER: Gumption Ahead*

        I was wondering if part of the manager’s performance is judged on retention of staff. If their bonuses, raises, or promotion is linked to keeping staff on-board, but they aren’t allowed to give raises, might lead some to do this out of desperation. Whatever is going on, though, advice is the same: RUN

        2. Richard Hershberger*

          This was my guess. With an isolated instance of the LW, it is a manager with poor judgment. But when it is systemic, there is something more going on. One possibility is that the company consistently pays below market rate while pressuring managers to retain staff. That is the less shady possibility, as it merely suggests poor business sense. The more shady possibility is that the money is not in fact coming from the manager but from the company, which is using this scheme as a tax dodge.

      2. Eldritch Office Worker*

        No, and it worries me that so many people are suggesting this. Look if your supervisor gives you a $25 dunkin donuts gift card, that’s taxable income. The IRS isn’t going to look at that twice but $6000 under the table? Way more likely to come up. If OP is in the tax bracket where $500 a month is significant enough to make rent chances are they’re not going to be audited, but the risk is there and the IRS is not going to play mental gymnastics with you over this.

        1. Not Tom, Just Petty*

          And I just thought about this. A bunch of people at this company get “paid” this way. What is some people report this and some don’t?
          Will someone at the IRS audit others who list the same level job? How deeply can they go into finances?

  8. Joan Clayton*

    Nope, Nope, Nope-ity Nope! This is a tangled web of problems. LW if you can withdraw from this agreement, please do and begin job searching.

    1. The Original K.*

      I love your user name- and I think Joan offered to pay her assistant Maya the difference between her salary working for Joan and her salary working for William (senior partner at the law firm where they all worked) out of her pocket, which Maya rightly declined.
      (Reference is to a sitcom called Girlfriends.)

      1. Joan Clayton*

        I love Joan Carol Clayton, Esq.
        Joan absolutely tried to offer Maya the pay difference to stay as her secretary, and I’m glad Maya stood her ground and said no!
        Their relationship was already messy, with Maya being her friend and boss. Joan would also let Maya run errands on her time and coming in when she felt like it.

  9. 2cents*

    Insert “this is not how this works – this is not how any of this works” gif.

    Seriously, the tax implications alone should have been a massive red flag for LW. I hope they take Alison’s advice seriously!

    1. Don*

      So many tax implications! If the manager is earning above the $142,800 social security cap and the employee isn’t then this is an improper dodge of proper SSI funding as well. And if the feds get wind of it you could end up having to hand over that entire 15% yourself.

      It’s perplexing from a financial point too since taking that money out of their own pocket means your boss isn’t just passing $500 through to you, they’re (presumably! Is your employer paying managers under the table?) paying taxes on the money they receive THEN spending after-tax funds to compensate you. What? Why? If they’re really asking managers to shoulder some austerity why not just do it on the books?

      When shit is shady in a way I can’t even understand the motives for, I presume it’s even shadier than it looks. Run.

      1. Shady McShade*

        “ When shit is shady in a way I can’t even understand the motives for, ” yes, this.

        Also that sentence is useful in … well every situation.

        1. LinuxSystemsGuy*

          I think the difference is that usually when stuff is shady you can figure out *why* it’s shady. Someone is clearly getting paid on the side, embezzling money, getting free work, getting sexual favors… something that somehow benefits the shady individual. Here, it’s like… why? This is clearly shady, but who is benefiting and how?

          Manager appears to be out $500 a month of her own money, employee is left potentially facing tax or legal issues, the company is opening themselves up to tax and liability issues (assuming they even know this is happening)… who is benefitting here and how? It’s weird not *because* it’s shady, but because it’s shady in such a bizarre inexplicable fashion.

  10. Charlotte Lucas*

    If this is common throughout the company, I would say OP is on a sinking ship.

    There is so much wrong with this… I think Alison’s list is spot on…

  11. CBB*

    I would not bring it up. This is your chance to quietly discontinue an arrangement that shouldn’t have been started in the first place.

    1. Two Chairs, One to Go*

      Agree. It’s so bizarre! Just drop it and start looking for another job where you can get paid your worth!

      I hope OP didn’t give her boss her bank info because that’s a whole other boundary.

      1. DJ Abbott*

        If she did, she can open a new bank account and close the one her boss has.
        OP, if you like your bank you could maybe open a new account at the same bank.

      1. Where’s the Orchestra?*

        Job search as if your life depends on it. Make sure you are customizing those application materials – but apply for everything that you qualify for, and for those stretch positions as well.

        I said it elsewhere- this company is a flaming dumpster fire of dysfunction.

    6. BabyElephantWalk*

      This is the sign to look elsewhere … but also if just discontinuing the arrangement quietly hurts OP’s bottom line moving forward it may not be something they can just let slide long term.

        1. BabyElephantWalk*

          Without question, OP needs to be working on their next steps and exit plan. But that doesn’t mean that they have to accept this status quo in the meantime.

  13. StressedButOkay*

    noooo, this is incredibly shady and could land you in a slew of issues that Alison listed! Plus, if your boss decides to be punitive, what’s stopping them from just not paying out because you said something they didn’t like one month, so you’re in this situation again?

    Run. ruuuuun

  14. Beth*

    Legally and for tax purposes, it could be regarded as a gift — in which case, your superviser is undoubtedly violating reams of policy by making those gifts. It needs to stop before the hole is dug any deeper.

    1. Lifelong student*

      Any thing received by one person from another in exchange for services is compensation and not a gift. The fact that it is coming from an individual and not a business does not change the taxability.

      1. Beth*

        The thing is that the LW is not the employee of her superviser, but of the company. The arrangement with the superviser is unofficial. The work the LW is doing is not for the superviser, but for their mutual employer.

        1. Eldritch Office Worker*

          Doesn’t matter. As long as LW works for the supervisor any gift is a gift from a representative of the company, and taxable. Some gifts could be considered de minimis and not be taxable but not cash 0r cash equivalents.

          1. AnonForThis*

            Now I have so many questions about gifting around the holidays. What about instances in which employees receive a holiday card with $50 cash tucked inside that says “thanks for all of your hard work this year”?

            Gift? Compensation? Taxable? De minimis?

              1. Eldritch Office Worker*

                Even if it’s a gift card.

                No one is reporting this, just like people probably aren’t reporting what they pay the babysitter. But if push comes to shove it’s compensation.

                1. Daughter of Ada and Grace*

                  My company quit allowing people to purchase gift cards with company funds because some people were trying to use them as a way to compensate part-time/occasional employees without having to go through HR/Payroll. (HR and Finance and Legal were very much Not Amused.)

                  Even our annual holiday gift has to get processed through payroll. Because of the aforementioned ban on gift cards, this is a physical item, picked by each employee with a cost of up to a $X dollars. The actual cost of the gift is passed on to payroll, and appropriate taxes for an $X gift are taken out of our next paycheck. ($X is picked with the understanding that we’ll be paying income tax on the gift, and therefore calculated so we’ll come out ahead even after taxes.)

                2. nelliebelle1197*

                  I think this only applies when the EMPLOYER gives the card. I did a quick scan and the key phrase was “company funds” when it comes to gift cards. There was nothing about personal gifts from manager to staff. Do you have a citation for this?

              2. Essess*

                It’s compensation and should be included in your details on your W2 at the end of the year that the company gives you. Mine was.

          2. knitcrazybooknut*

            The annoying part of payroll law is that de minimus isn’t really defined anywhere! Frustrating.

        2. nona*

          Yeah, no. Supervisor and employee have a work relationship, so payments are going to be assume to be related to that work context, unless the supervisor can establish some reason why they are paying the employee. Supervisor is essentially assumed to be acting on behalf of the company.

          It’s really, really, really hard to consider something from an employer/supervisor as a gift to an employee. $20 gift card at Christmas – fine. $500 a month for no other specified reason is going to be considered taxable income. It’s really, really, really hard because otherwise employers would find all sorts of way to gift things to the employees to avoid payroll taxes, and IRS really wants to disincentivize that.

    1. Librarian*

      That’s what I was thinking. It would cost the manager less since it would at least be pre-tax. Super weird.

    2. Falling Diphthong*

      Companies seem to have a hard time moving money between buckets. Like, a manager will KNOW employee wants more money, but is stuck with offering a new computer or some specialized training.

    3. AndersonDarling*

      My first thought was that the manager got a bonus or raise and is personally parsing out some of it to keep her staff. Shady as fudge.

    4. Snark No More!*

      Well, if they’re going to do it correctly, so that the LW actually gets $500 more per month, the company would have to give her a raise of at least $700 per month. Giving her a $500 per month raise gives her a net of about $350 per month, if you’re doing it correctly.

    5. hbc*

      Putting myself in the manager’s shoes, I wouldn’t want to give myself a permanent pay cut if I think the company will eventually come around and give the raise, even if there wouldn’t be a ton of red tape involved. I’m guessing a whole bunch of these managers are thinking some version of “It’s worth $6K to me this year to not have to do my employee’s work on top of my own” and hoping for a light at the end of the tunnel.

      1. Willis*

        There are a thousand reasons this set-up is super sketchy and bad for the OP, but you touch on something I was thinking. The OP mentions future raises would be based on her lower, actual salary (and thus lower, assuming they are some percentage). But what happens if she gets a raise a year from now so her boss stops paying the $6K? Then OP could be taking home the same or less than she is now…potentially a way bigger hole than just 10% (or whatever the raise is) of $6K.

        1. Tiffany Aching's imaginary friend*

          I want to know if it’s flowing downhill. Are managers getting extra untaxed $$ from *their* managers, who are getting extra untaxed $$ from the directors, who are (etc). Is it all a money-laundering scheme of some sort? How big is this company, anyway? And is it a non-profit and that’s why they’re being weird? It’s so very very bizarre.

  16. Mastadon United*

    If it was just OP’s manager trying to right a wrong of an internal raise not being approved, I could understand even though it is still problematic for all of the reasons listed above. But why are multiple managers doing it? Where is all this money coming from?

    Two more thoughts: If the managers are taking money out of THEIR salaries to pay these under the table “supplements”, doesn’t that open up even more tax problems like…. does it count as paying an employee outside of the company? Can they/will they claim on their taxes that they personally paid wages, such as a domestic worker?

    Then, I was getting a real “carrot or stick” vibe from some of the problems Allison listed… like if you have a bad month and they say “NO! You did BAD! You get NOTHING!” which is obviously ridiculous.

  17. bearing*

    Is it at all possible that there is some confusion and she is being paid the extra out of some kind of discretionary budget?

      1. Falling Diphthong*

        Huh. That was my guess–multiple managers re-routing the “pizza party retention fund” as a “direct cash payment retention fund.”

        OP, that makes it even more weird. I don’t know why it’s economically viable for multiple managers to reduce their own pay in this way, but the answer probably isn’t “A really good above-board reason that works out well for OP.”

      2. DANGER: Gumption Ahead*

        How are you getting it? Cash? Cashapp/Venmo/Paypal? How is the transfer documented, if at all? Not that it changes any advice, I am just curious AF

      3. Shiba Dad*

        Thanks for the clarification OP. Got to say though it’s not a good situation if multiple managers are paying people out of their own pockets.

        Even if it were discretionary funds it wouldn’t be good. A friend of mine was in a situation where he received discretionary money. He worked for Well-Known Frozen Food Home Delivery Company. His manager tagged along with him one day on his route and realized that my friend’s route was craptacular. The manager helped my friend out.

        Then my friend gets a New Manager who sees that extra money was being paid to my friend and assumes the worst. My friend didn’t last long with New Manager,

  18. Dani*

    This happened to me once but I was 18 and working in a bar and I asked for a small hourly wage increase on my minimum wage. Manager said yes, until Christmas came round and I was missing money. Turns out he didn’t get permission from the owners and was giving me it on the side but when the owner found out he told them to stop paying it to me. Anyway at the time THAT was a big sign of a problem and I quit as a result. I can’t imagine being in this person’s situation!!

  19. Eldritch Office Worker*

    First, OP I want to be clear that I don’t judge you for accepting the arrangement. That’s a LOT of money, and it sounds like your finances are pretty tight. But if I could have given you advice at the beginning of this, I’d have said don’t rely on it – stow it away, use it if you really can’t make rent, and actively start job hunting. This isn’t a sustainable situation. Do the higher ups at this company know this is happening? If anyone halfway competent in leadership finds out they’ll want it to stop, and chances are that just means they’ll tell the supervisors to cut it out without finding a way to make that workable for the people who are depending on that income.

    There’s a reason all your colleagues abandoned ship, please follow them.

    1. Falling Diphthong*

      This isn’t a sustainable situation.

      In a way, maybe be relieved that the New System cracked as fast as it did? For all the reasons OP listed, and all the reasons Alison listed, this was not sustainable. Better a wheel came off before too much of OP’s budget had shifted to assume this money was reliable.

  20. Confused*

    This is so odd I was leaning towards the idea that LW must be in another country where this is less egregious? Any chance there’s somewhere that this happens?!

      1. Lanie*

        OP, can you at least give us some kind of vague description of what line of work you’re in? Like, is this a “typical” office job with a standard management structure, or have you anonymized the details and maybe (unintentionally!) caused confusion about what kind of work this is?

          1. Renata Ricotta*

            This tracks that you’re in that field — my boyfriend works in entertainment and it seems to me like there’s a LOT of things that are wacky/shady in that industry that people accept as normal, even in corporate environments. In his case, there’s a sister company not in entertainment that is run by the same CEO way more professionally/in line with standard practices. It especially seems like a pattern that they egregiously underpay everyone except the highest-level fancy people, and try to make up for it in “perks” like prestige, exclusive events, meeting cool people, expensive company gifts (including gifts from bosses/coworkers), etc.

          2. Marni*

            Oh, that kind of makes sense. If you’ve been following the #PAyUpHollywood stories on Twitter, you may have heard about how underpaid writers assistants are, and that writers and producers commonly pool money to give them multi thousand dollar holiday bonuses out of their personal funds. It’s a business where some people are making big bucks and can actually afford to pass on $500 to someone else without feeling the pinch. Doesn’t make it a good system, but it may be a local norm.

    2. Boof*

      I was wondering this too – despite rumors of how crazy the entertainment industry is I didn’t realize it had this level of dysfunction

  21. Falling Diphthong*

    Re #7, I wonder if the multiple managers are not tapping their own take home pay, but some work fund? Like the company thought “Here’s a fund you can use for retention, like giving people themed water bottles or pizza” and various managers have decided to tap it for a few hundred dollars/month to keep their top performers around.

    1. TB*

      Oooo, that’s actually a good thought. I had access to $500 a month in a prior job for team building and morale boosting- I usually just did fun food days (I know the current vitriol about pizza parties but like…my team did genuinely enjoy them and I also fought to keep their pay fair)…nothing would have really stopped me from cashing it out in gift cards and just…giving it to one person. Or keeping them and then taking out the equivalent cash to give to an employee.

  22. Meghan*

    Well, I guess there’s ONE of the reasons people left in droves. This is absolutely bonkers. Do as Allison says, but definitely start trying to find a new job ASAP. There are so many issues with this arrangement.

    Also, how much is she making as a manager that she’s able to fork over an extra 6K a year?? Assuming this is the only person she’s doing it for?????

  23. Mastadon United*

    Also, I searched, and I’m fairly sure this is the first time I’ve seen the F word spelled out by Allison :) This was a very appropriate time to break it out!

  24. TB*

    Ok DON’T TAKE THIS ADVICE, but part of me really wants you to innocently and nonchalantly bring this up to HR in the same way you would if your paycheck was shorted the normal way, through a payroll error. “Hey Jane- I noticed that this month I only received my $xxx normal paycheck, but have yet to receive my $500 auxiliary payment- are you able to help figure out when that will be coming?”. And then just watch the situation slowly implode as they uncover what exactly you mean.

    1. Falling Diphthong*

      There are several scenarios in which this means Payroll says: “Huh. You owe all the previous $500 chunks back to the company, for that was unapproved.”

      1. TB*

        Nah, how could the company demand money back that was never theirs to begin with? Unless you were correct above about it being the supervisor cashing out employee funds…but even then, I feel like it would fall on the Supervisor to pay back, not the employee. I could see it having tax implications though! Again, I don’t recommend the employee actually do what I suggested, BUT if they did, I would want to be in the front row with a bucket of popcorn to watch the situation unfold and devolve hahaha

      2. Eldritch Office Worker*

        I can’t think how they would be able to legally reclaim money that didn’t come out of a business account but there could definitely be punitive consequences

        1. Cthulhu's Librarian*

          I highly doubt that a company where this sort of activity is widespread would care too much about the legallity of trying to reclaim the money…

    2. Annony*

      From the description, I doubt that there would be any imploding. I doubt multiple supervisors would be doing this without the company being aware of it. My guess is the response would be “You need to take that up with your supervisor.”

      1. Eldritch Office Worker*

        Even if that’s true, and I’m not actually prepared to accept the premise, “the company” being aware of it could mean a million things. The department head? Maybe. HR/Finance/CFO? Ehhhhh probably not.

      1. Amethystmoon*

        Good point. Is this a smaller company? I don’t see where that was mentioned, but I can’t believe that any manager in a large company would take this sort of risk.

    4. zinzarin*

      This was my thought exactly.

      I would write an email to my supervisor, CC:ed to HR, stating pretty much what you said above. But I’d actually recommend doing it. Somebody needs to be alerted that this is happening.

      1. not a doctor*

        I think this is too risky for the OP to do right now. This isn’t the kind of information I’d trust HR with until I had way more security (like another job lined up).

          1. Where’s the Orchestra?*

            Oh agreed – let this die quietly and as quickly as you can get out of “Dysfunctionville.”

  26. Hiring Mgr*

    Can i be a manager there? Must pay pretty well if they can all afford to be paying employees out of their own pockets!

    What did they do, walk up to you like a gameshow host and start counting bills out?

  27. Celeste*

    The boss says it’s her own money, but other bosses do the same? Something is SO wrong there. I can’t believe all f their families would get on board with them taking essentially a pay cut to fund their staff. I suspect there’s something really fishy going on with cash flow.

    Get out however you can.

    1. Falling Diphthong*

      I keep picturing the mob.

      Like, I don’t know enough about being a criminal mastermind to understand what specifically is hinky at this company, but OP should probably make soothing sounds while backing away. Watch any future imploding from a safe distance.

    2. AndersonDarling*

      I worked somewhere where managers were showered with bonuses. They didn’t promote from within because they didn’t want anyone to report back down to their prior their teammates about the insane bonus structure. Managers would routinely get bonuses equivalent to the pay of their entire teams.
      At the same time, the company were misers when it came to staff pay. They kept pay as low as possible and seldom gave raises because raises had to be approved at the top, not my the direct manager or the direct director.
      This sounds like the inevitable outcome of this arrangement.

      1. Bamcheeks*

        There was a letter a few months ago where something similar was happening but with bonuses, and all the maths was very confusing because the manager’s bonus worked out to something like three times the pay of the rest of the team, and t hen they paid bonuses to the team out of that. Lots of us thought that sounded weird but it was something like real estate or law where the person at the top was making seven figures in commission and bonuses but working ninety million hours a week, and the team were administrators who supported her but worked normal hours and had normal lives. And everyone familiar with that industry said it was totally normal and common.

        So could it be something like that? Or did that only work because it was bonuses and not regular pay?

  28. FYI*

    Don’t mention anything about the missing $500, because it’s better for you if this practice DOESN’T continue. Just get out.

  29. The Original K.*

    Oh, absolutely not! Quit! Go work somewhere where you’re paid what you’re worth, ON THE BOOKS.

    2. Don*

      Absolutely. If nothing else, this money is subject to social security withholding. Under normal conditions the employer pays an additional 7.5% of the amount paid to the employee direct to SSI and the employee’s money received is subject to 7.5%. So in this case what SHOULD be happening is that the employer cuts a $75 check to the government and a $462.5 check to the employee.

      Someone who isn’t an employee but is instead a contractor, paid on a 1099 basis rather than w-2, would have to pay the entire 15% themselves. How would this shake out if the IRS took issue? WHO KNOWS? I’m sure there’s a tax attorney somewhere who could tell you whether someone can simultaneously be a w-2 and 1099 employee of the same organization or whether this would be classified as 1099 employment direct to the supervisor. But if it’s that hard to suss out it’s a pretty huge sign that this is not a deal on the up-and-up.

      1. banoffee pie*

        Interesting, thanks. I would definitely be afraid of getting on the wrong side of the IRS. So it really wasn’t fair of the boss to ask the OP to accept wages like this at all. Sounds dodgy af

        1. Annony*

          It definitely is. I have seen people work as both a w2 and 1099 employee but they had to be careful to keep separate what times they were doing each and what tasks fell under each classification. They were not being paid twice for the same hours. I’m not sure you can legally be paid as w2 and 1099 for the exact same tasks.

      2. Person from the Resume*

        Weird thing. IDK if the IRS would call this income tax because it’s not coming from the company. It may be more legally a monthly gift that could also have tax implications. IDK; this is not how pay/income is supposed to work at all.

        2. Littorally*

          The context of the arrangement is almost certainly going to qualify as income. I can’t imagine the IRS tamely accepting the idea that this extra money is not being given in the context of the working relationship.

        3. Mockingjay*

          Don pointed out upthread that OP is receiving compensation for work performed, which ultimately for the company. IANAL or a tax expert, but I’d bet my own paycheck that IRS will count this as income.

          Were I an IRS agent and OP was selected for an audit, “why didn’t you report this first instance immediately?”

          OP, please consult a tax attorney. Legal Aid or the state bar association can recommend someone. The company might get slapped with a fine, but I fear individual blowback on you and other coworkers when you go to file next year. Also, the IRS has a Taxpayer Advocate Service; not sure how helpful it is, but poke around the site:

          https://www.taxpayeradvocate.irs.gov/

            1. Ask a Manager* Post author

              I wouldn’t think so. The way the IRS looks at income is different than how your state labor dept will look at what was/wasn’t a wage agreement with your company.

          2. Amaranth*

            Wouldn’t the company have already paid taxes on it when they paid it out to the manager? Probably at the wrong tax rate considering where it ended up… This is really a mess.

      3. Foxy Hedgehog*

        IANACPA, but I really feel like the LW should ask payroll to have this money put on their W-4 assuming it’s not there when they receive the W-4 in January. Just as a CYA, just to document that they asked.

        (For non-USA residents, the W-4 is the document you receive from your employer in late January/early February that documents how much money you were paid and how much money has already been withheld for taxes by the various levels of government).

        1. Eldritch Office Worker*

          That’s a W-2, a W-4 is filled out upon employment to determine tax withholdings. Just so there’s no confusion.

        2. Amaranth*

          I don’t think so, as the company has no record of paying it to OP. In their books it was paid to OP’s manager, and they can’t report it twice.

        3. Observer*

          but I really feel like the LW should ask payroll to have this money put on their W-4 assuming it’s not there when they receive the W-4 in January. Just as a CYA, just to document that they asked.

          Not going to help. The taxes are not being paid, and the OP knows it. If the IRS goes after them, they are toast. And if this keeps up, the IRS will wind up going after them, even if they do everything right. Because as some point someone is going to go after the employer, and then it’s going to be open season on every schmoe who bought into this insanity.

        4. nonegiven*

          I’d definitely increase withholding to cover the 15.3% + whatever % tax bracket I was in. Report it as a side gig.

      4. L.H. Puttgrass*

        Adding to what Don said: This has a lot of potential to bite the OP in the butt come tax time. Because all those $500 checks are taxable but taxes haven’t been withheld, OP is at risk of coming up short enough on their taxes to incur penalties with interest dating back to when they should have been making quarterly estimated tax payments on that money. Or OP could cheat on their taxes, with the usual bad results if the IRS finds out.

        OP, I’d find a really good tax person now. Don’t wait until tax time.

  32. I'mSorryWhat*

    Multiple managers do this? Feels like a giant warning sign that the company as a whole is trying to pay people under the table. I’d be really curious to see if something else was cooked in these books.

    1. AVP*

      I wonder if they’re being paid $1000 monthly by their bosses and passing off part of their own unofficial “bonuses”! Maybe it’s all a pyramid scheme.

  34. pickaduck*

    On top of leaving, make sure you have enough to pay all of that back tax if it comes up. Also quit taking that money now – WTH?

    1. Where’s the Orchestra?*

      Agreed. Let the extra payments die quietly and quickly. Then run to an accountant/tax specialist and find out how much money you are going to owe in tax implications. Set all that money aside somewhere you can’t touch it if at all possible, because the last thing you want is a surprise tax bill come April 2022. I very highly doubt that the correct taxes are being paid here.

  35. Allegra*

    “Since we came to this agreement, I have learned from some of my coworkers that many people have this arrangement with their direct supervisors at my company.”
    I desperately want to know how you all found out about everyone getting weird under-the-table payments from your bosses! In a regular nosy way but also in a company culture way–do you and your coworkers usually have good salary transparency with each other? Has this not been the first weird thing with money at this company, and you have to talk to each other about it frequently? I have so many questions.

    1. Where’s the Orchestra?*

      Agreed – the fact that multiple managers are doing this is what makes this whole place so dysfunctional. This is building a house of cards that will tumble horribly when it all comes to light.

      OP – let the arrangement quietly die and follow your coworkers out the door to a new job that will put all your compensation on your pay stubs so you are not on the hook for all sorts of tax and Social Security obligations that your company normally would be paying.

  36. Madame X*

    Question for the OP: where is this extra $500 documented? is it on your W2? Are you simply receiving a separate check from your manager’s personal account?

      2. Olive Hornby*

        Unpopular opinion, and yes, get out as soon as you possibly can—but the chances of the IRS actually coming after you for one $500 zelle transaction per month is minimal. The apps only have to report transactions over $600, and there’s a big needle in haystack quality here—how many people Zelle $500 to their roommate for their half of the rent? Take the money and run.

        2. JB*

          The IRS isn’t looking at your individual Zelle records. When (not if – when) they find out about this, it will be through the company/someone at the company ratting them out, at which point there’s a good chance the company will be required to turn over LW’s name as one of the, apparently, multiple people to have received unreported income.

        3. BayCay*

          Agreed with JB. It’s not so much about what trouble she’s in now, but the potential trouble she’s in*when* the company gets caught and they follow up with those who have been involved.

          1. Olive Hornby*

            I guess I don’t understand who has an incentive to rat the company out to the IRS—or the IRS’s incentive to pursue intently at a small scale. Many, many people receive untaxed income in one way or another, and the IRS has very limited resources to do intensive investigations of people like OP even if they go after the company (which they should! I just don’t think it’s likely, and I think the OP’s need to pay their rent should take precedence over the minimal likelihood of tax trouble down the road.)

            1. Dramatic Intent to Flounce*

              The suspicion/concern is ‘the company’s doing other things that are Extremely Illegal, and once one of them breaks EVERYTHING will get investigated.’ Given this is going on with multiple managers (WHAT.) and it’s so incredibly shady, it’s entirely possible this is a dysfunctional system of something even worse.

            2. Observer*

              The thing is that there is actually a very high likelihood of this blowing up. Thief’s Honor is a myth and anyone who depends on it is asking for trouble.

              This company is as shady as all get out. And is not treating its staff well. Which means that there is a really, really high chance that either that either someone is going to blow the cover off this place, or that some government agency will do their own investigation of the company. When one of these happens, anybody who got any shady payments is going to be in trouble.

        4. Observer*

          but the chances of the IRS actually coming after you for one $500 zelle transaction per month is minimal

          Not at all. Zelle is tied to the Boss’ bank account. And if the dung hits the fan (and really, really could), then managers’ personal accounts are quite likely to get audited. And when that happens, the OP is going to be up a creek, along with every other (underpaid) employee whose boss paid them this way.

      3. Texas*

        Holy moly. Does she make a memo in the transfer about the money? Like “$500 to fivehundreddollhairs for work at Company”?
        (This is definitely shady no matter what, tho! Just curious as if there is documentation I would wonder if the manager truly doesn’t realize how bad this is [which only further shows how messy the situation is]). That sucks that you have to deal with this BS and your company not compensating you correctly.

        How do your coworkers in similar arrangements deal with managers not paying them the promised amount?

  37. Essentially Cheesy*

    I think the lesson to be learned here is to never accept those terms! Ever! This is worth getting past your inner insecurities and insisting that things are done above board. It’s worth it in the end.

    Learn to not be afraid to stand up for yourself, because no one else will!

  38. KK*

    Oooh girl, I would cut and run. The red flags scare me….tax implications, blackmail, missing or shorted payments. And scarily enough, would you need to take on the subsidizing if you became a manager and needed to retain critical staff? This is so icky sticky messy to even read!!

    1. Eldritch Office Worker*

      Yes this is if NOTHING else a reflection that the ethical quandaries you’re already navigating will only get worse if you stay/move up within this company. There are piranhas in the water, get out.

    2. BayCay*

      Not to mention the people who aren’t getting the ‘fun payments.’ It’s only a matter of time until somebody finds out and reports them.

  39. Purely Allegorical*

    The other negative side effect of this practice is that it keeps people in their jobs when they would normally move on for a better salary. So it’s protecting the company from the natural consequences of not paying people, which is helping the company avoid A Reckoning that it sounds like it needs. The core issue of low pay isn’t being solved, which just means it will go on longer.

  40. animaniactoo*

    #1) The fact that several managers at this company have done similar makes me wonder exactly what the managers salaries are that they can even collectively AFFORD to do this so commonly.

    #2) The fact that several managers at this company have done similar means this company is loony tunes and you should run away from it as fast as your little resume can carry you.

    1. Where’s the Orchestra?*

      So much this second point. Shine up that application packet and get to a company that puts ALL the compensation on the paystub.

  41. CarCarJabar*

    I had an HR rep suggest this arrangement to me once. In lieu of paid maternity leave, she suggested I could take FMLA from my Real Job, and have my boss pay me through his separate company (that I did not work for) to do part time work for my Real Job. Then, Real Job would reimburse Boss’s Company for my labor.

    I am happy to report I did not accept this arrangement, and instead, accepted a position at a lovely company that actually offered paid maternity leave. That they honored even though I was 7 months pregnant when hired.

  43. Person from the Resume*

    Why are multiple managers there willing to dig into their own wallets to pad their employees’ salaries? I’m guessing no one in Finance, Legal, or HR at your company knows what’s going on, but if they do and just look the other way, that should set off major alarm bells.

    Wow! This is the only think I disagree with Alison about. “Many people have this arrangement with their direct supervisors at my company.” I’m feeling confident that higher management, Finance, Legal, and/or HR knows about this.

    … but this is batshit crazy and all kinds of shady.

    1. Where’s the Orchestra?*

      I agree that if Finance and Legal exist they are looking the other way. I’m almost positive that HR has heard rumors and declined to investigate. I keep saying it – this company is a dumpster fire of dysfunction. Please get out as soon as you feasibly can.

  44. I WORKED on a Hellmouth*

    Oh my god.

    OP, I once worked for a truly terrible company under an unbelievably terrible boss who did the shadiest of things and also BROKE SO MANY LAWS. SO, SO MANY LAWS. And even SHE wouldn’t be paying people $500 a month under the table and acting like it was normal. I can not conceive of a workplace where multiple managers are doing this, it is literal insanity. I don’t know what is going down at your company, but I’m guessing some day in the not too distant future the IRS or the FBI might be coming to Corporate Town, and you probably want to be far far far far FAR away before that day comes. RUN.

    1. Where’s the Orchestra?*

      You know – your stories of your nutty manager were surging strongly to the forefront while I was reading this one.

    2. LQ*

      I keep thinking that this has to be a company that pays people’s direct manager’s enough that they can afford be be out $6k/year or more. $6K assumes you only have this arraignment with 1 staff person. And that they have managers who care enough either about their staff or about keeping their staff or something….that they would decide this is an acceptable arraignment. But that the company can’t or won’t pay a decent wage to some folks.

      I keep wondering if this is a weird nonprofit or what kind of company has this kind of pay disparity BUT ALSO this kind of loyalty. That’s a lot of loyalty from the boss to the company in a lot of weird ways. Honestly I keep thinking about MLMs.

      1. Is you manager a bossbabe*

        This situation definitely has an MLM feel to it. I’m having a really hard time believing this would fly in any other type of work environment, especially with multiple managers involved. I’m sure there’s other one-offs here and there in other poorly run establishments, but not multiples.

        1. Butterfly Counter*

          Same. Just started watching a documentary on an MLM and I can see that this might be a way to keep the commission revenue stream flowing upward by retaining downstream employees who would rightfully quit.

    3. Coder von Frankenstein*

      When “Worked on a Hellmouth” says things are bad and you need to run… get out now.

    4. quill*

      Honestly I did wonder for a moment if this was property management, and then I realized there was no wildlife involved, so it couldn’t be.

  45. Third Generation Nerd*

    In my position I see a lot of contracts cross my desk that have this type of arrangement. An executive (usually a sales/production person) will want to compensate their assistant above the scale for the position, and will designate a portion of their own compensation for the assistant. (Or perhaps our algorithm says they only qualify budget-wise for a 3/4 time person, and they pony up the extra $$ to get that person up to FTE.)

    In these cases though, that arrangement is a formal contract, and all is processed through payroll.

    For all the reasons Alison noted, this is a rotten situation.

    1. Guacamole Bob*

      Yeah, I think this was common with the commission-based financial consultants when I worked at a brokerage firm. But when it’s above board and processed through payroll it’s a totally different story!

      1. PT*

        I worked somewhere where a lot of managers ability to control pay/budget was locked so bosses would pay for treats out of their own pocket. But it was usually like, pizza for everyone! Or “You went above and beyond here is a donut/your favorite candybar/a $5 giftcard!”It was all about the gesture of “I appreciate you and your hard work, even though the company has completely hamstrung me from compensating you appropriately,” oriented around relationship-building. Because of COURSE people are going to leave when they find a job where they are compensated appropriately, but people are less likely to do that when they like their boss, work environment, and feel generally comfortable.

  47. Flashbacks*

    This is unfortunately not unheard of in the entertainment industry where employees making mid-6 figures to well into the 7 figure range have assistants making close to minimum wage. I used to be an assistant in this space and several of my coworkers had similar arrangements with their bosses because HR simply wouldn’t approve raises at the assistant level regardless of seniority—so a boss with an exceptional assistant wouldn’t be going very far out of their way to pay a few hundred extra dollars out of pocket (under the table, of course) to keep them from leaving after the one year mark. Just one of many issues with the industry but there are so many people dying to break in that I’m not optimistic things will improve anytime soon…

  48. feral fairy*

    Soo many red flags. Including the fact that at 2 years you are one of the workers who’s been there the longest. I worked at a place like that and there was a reason turnover was so high.

  49. Sunflower*

    What the heck? How much do managers make that they won’t miss all that money and risk legal issues? Even if they make mega-bucks, why would they give up $500 a month when it’s the company who should pay the employees what they’re worth?

    I don’t buy the reasoning that employees will leave. People leave all the time and they just hire new ones. I don’t care how great you are. There’s no way $500 a month is coming out of my pocket to keep an employee.

    I just can’t compute this whole situation at all.

  50. BA*

    I’m wondering if there are negative tax implications and compensation violations that OP should be reporting on the way out the door, too.

    As in – they’re being compensated as though they’re a contractor (1099) while also receiving a W-2. As noted in many previous posts, there’s a large difference between contractor and employee, and if OP and others are being paid on the side for work they’re employed to do, there is a pretty significant violation occurring, no?

    If I’m thinking this through correctly, as you RUN FOR THE DOOR (sooner than later, please), OP I’d probably alert the department of labor. You may be able to hand tax responsibility to someone else, at the very least.

  52. doreen*

    I am kind of wondering what industry this is. Many years ago, a friend of mine worked as a sales assistant for a brokerage firm. She did not get a bonus from the company – the brokers she assisted passed on some of theirs. I don’t know about the taxes, paperwork etc – but it was definitely the brokers who were given the bonus by the company and decided how much to give my friend. She said it was common in the industry and the bonuses she received were certainly the equivalent of $500/week today – the main difference was tha tshe got the bonus once a year rather than a weekly payment.

      1. Guacamole Bob*

        I used to work for a brokerage firm and what you describe is how it worked, but it was definitely all official through payroll and not a random check on the side at my company.

    2. league**

      sounds like tipping out the barbacks/runners/hosts at a bar or restaurant….but it doesn’t sound like this is that industry.

  53. generic_username*

    I also find it interesting that they can’t afford to give you a raise, but somehow pay your supervisor enough that she is okay/comfortable giving you $500/month from her own money…. Like, this speaks to a massive pay disparity to me

  54. Middle Name Jane*

    I feel bad for the OP because I understand what it’s like to need more money to meet your expenses, and along comes what seems like an easy solution. But for all the reasons Alison and other posters have mentioned, run! This is not an okay situation and has a high potential to come back and bite you later.

  56. Middle Name Jane*

    So…20+ years ago at my first job out of college, I made next to nothing and was the lowest paid person in my department. My grand boss twice gave me cash gifts of $100 each at Christmas out of her own money and swore me to secrecy. I took the money because I badly needed it to meet my bills. I spent a long time feeling weird about it, though.

    1. ecnaseener*

      I think a Christmas gift is a very different thing. Yes, that’s a larger amount than I’d expect, but it’s a one-time gift that wasn’t meant to count as part of your salary.

      1. D*

        Agreed, that’s a personal gift – maybe it was out of guilt of underpaying OP, maybe grandboss just remembers what it was like to be struggling getting started, who knows, but it’s not meant as a workaround “raise”.

  57. Lucious*

    Restated here for visibility: LW should immediately pull and save every pay stub and file they have with this employer. There may not be records of the $500 payments,but they need to find some document acknowledging this arrangement. If none exists, LW should try to send an email or a documented correspondence confirming this.

    The tax implications alone for underreporting $6,000 a year of income are dire enough. If the LW was in the US , they’d owe an uncomfortably large bill if the IRS found this arrangement out. So would the employer , but that’s a whole different can of worms.

    I’ll also recommend leaving this “employer” ASAP. This company is a sinking ship- don’t wait until the place goes under , an event which may or may not include a raid by law enforcement officers w/warrants.

    1. starsaphire*

      Well, and the fact that “it’s shady as fuck” is all the way down on the BOTTOM of all the reasons why this is bad… I mean… *gestures futilely*

      Run, OP, run!

  59. Out & About*

    What were the reasons they gave for not being able to provide a raise? Is it possible that even though it comes from the manager’s account that they are expensing it to the company? A shady way for the company to avoid taxes?

  61. Captain dddd-cccc-ddWdd (ENTP)*

    Question for OP: The other people who also seem to have this arrangement with their own supervisor, are they in a similar position to you in that they are the ‘longer tenured’ (2 years isn’t much to be the most established, but that’s part of the dysfunction) people the managers sort of rely on to keep things running?

    My theory about this is that it’s a more straightforward motive than ‘the mob’, ‘a front for something’ etc. Managers will be screwed if people like OP leave – whether thats because of a hiring freeze, company replaces experienced people with ‘noobs’ etc – so it’s to the manager’s benefit to retain the OP even if it costs them personally, because otherwise they’d be out of a job due to retention, they feel the department would be shut down as they won’t be able to produce, etc. In other words the $500 “bung” to keep the person around as that’s the only way the manager feels they can keep things going.

  62. Kella*

    I’m wondering why *multiple* managers at this company think this practice is totally acceptable. None of the potential reasons I can come up with are good news:
    1. They are all completely oblivious to all the legal, practical, and ethical problems, which suggests some really dysfunctional norms in that company
    2. They are being incentivized somehow to do it and are directly benefitting from the shady practice. A. few people in the comments have mentioned bonus structures that lend themselves to this kind of problem.
    3. They are being ordered to do it by higher-ups, and fear loss of their job or other shady consequences if they don’t handle raises this way
    4. They are doing this to try to protect the lower employees from the worst of the dysfunction in the company, and figure paying their employees what their worth is more ethical than making them face the full brunt of the issues, which is kind of just a different version of #1.

    Regardless, the problem has to be systemic for this many managers to all make such a shady decision.

  63. Not your typical admin*

    Oh my gosh! This is so bad on so many levels. Not only is the company shady, it can cause you so many personal problems. My husband and my personal finances were audited by our state department of revenue. It was miserable and we had to justify every deposit we made for the last three years. If something like this had shown up we would have been in serious trouble.

  64. OlympiasEpiriot*

    Another person saying

    CUT AND RUN

    Get with a different company.

    My knee jerk reaction was What About Taxes??

    Second was Is Manager Allowed To Make Gifts Like That?

    Third was That Is So Sleezy Of The Company.

    Please say you’re checking you resume and sending it out.

    1. OlympiasEpiriot*

      your resume… f’ing automistake

      Please make tracks. I totally get why you agreed and I probably would have done the same in your shoes; however, if you are worth 500DollHairs’Salary+$6000/year, then you are worth an actual salary based on that full amount plus commensurate benefits, bonuses, SS deductions, 401K deposits, etc. and probably more, too, somewhere that’s not so skeevy.

  65. Red*

    Oh wow. You know it’s bad when Allison cusses fully and out in the open like that. OP you need to run.
    I have worked for shady companies that did shady things and, trust me, comeuppance is coming.

  66. Middle Manager*

    Alison’s list is perfect, but I’ll just add this is a terrible idea in terms of increasing diversity/equity/inclusion in the workplace. Rich managers from wealthy backgrounds or with high earning spouses can potentially afford to pay additional cash to their employees giving them an unfair advantage over their manager peers from less financially well off backgrounds in terms of staffing retention and recruitment. Basically, you’d have to be wealthy to be a manager in this arrangement.

  68. Jeremy Bearimy*

    Aside from all the other obvious/already mentioned issues and the 5-sh different ways this is illegal… it’s just amazing that this company somehow pays supervisors enough (apparently approves SOME raises) that they are willing to pay their direct reports out of their own income, but raises for those lower rung employees don’t get approved. Another huge red flag.

  69. theonceandfuturegrantwriter*

    I am dying to know what industry this is. I’ve seen speculation of everything from a weird nonprofit to a brokerage firm to the entertainment industry to Enron to an MLM. I would also add: a political campaign or PAC? Some kind of fly-by-night church or mission? A family-owned business highly reliant on under-the-table compensation? The mob? Just spitballing here.

    I can envision scenarios where this is blackmail or tax fraud or money laundering, but I can also imagine a number of scenarios where the supervisor really is trying to do the right thing, albeit in the worst possible way. In any case, OP needs to get out at their earliest possible convenience.

      1. AVP*

        Lord this explains a lot! I think it’s likely just people coming up with “creative solutions” to get around their HR problems but not realizing they’ve created an even bigger boondoggle for themselves.

        1. nonegiven*

          I wonder if the people that are paying out the money are taking it off their own taxes as a business expense?

  70. Not good at making up names*

    Since this is apparently somewhat common at this company, this makes me wonder if the company has some source of off-books cash that for *reasons* cannot be kept on the company’s books and therefore used for covering employee salary – none of them good. This could be that they’re taking under-the-table payments on goods/services sold (and thereby avoid sales or other taxes), they could be laundering money from even shadier activities, they could be cooking the corporate books in countless other ways.

    It seems exceedingly unlikely that multiple managers are paying out thousands per year in personal funds to other employees, unless they’re getting this from somewhere for this purpose.

    TLDR: GET OUT

  71. Sola Lingua Bona Lingua Mortua Est*

    Just because the company is full of bees doesn’t mean there’s honey anywhere to hang around for.

    Flee to a better job and employer and don’t look back.

  72. BayCay*

    Just because I’m curious…how can the LW report this income legally now? I’m assuming they’d have to report it as misc income, but they couldn’t report it as independent contractor pay right? Because that would still require a 1099 form from the employer, correct?

    I’m just confused as to how they could possibly report this income legally without lying about *which* employer it came from? Wouldn’t report it as side pay from her main employer raise eyebrows from the IRS? (like, why isn’t this on the main W-2?)

    1. L.H. Puttgrass*

      I Am Not a Tax Professional.

      But I do my own taxes and have prepared them for others, and I once stayed in a hotel that’s supposed to make experts out of everyone, so: I believe that the official way to do this is to act like you’re an independent contractor and make quarterly estimated tax payments, including amounts for the employee and employer social security withholding and probably medicare. And don’t forget state and local taxes. As for the source, I’d guess that OP could report is as coming from the company or the manager personally, but here my time staying in the aforementioned hotel is failing me because I really don’t know the mechanics of how one is supposed to report under-the-table salary from one’s boss’s own pocket.

      In me volunteer tax prep days, this issue would have me running for supervisor help stat.

      1. Former Auditor*

        You don’t have to attach a 1099 to your tax return. Most of the tax software wants you to key them in, but that’s not an IRS requirement.

        The IRS matching program is looking for 1099s and W-2s that are /not/ included in reported income. They’re not looking for people reporting /more/ income.

        Best practice is probably to put it down as miscellaneous income. $6000 would require schedule SE (self employment), but smaller amounts might not: I don’t remember the threshold offhand.

        1. Amaranth*

          Of course, if OP filed that much additional income, the IRS would eventually be wondering about a 1099, but IIRC, I didn’t need to file self employment until I’d filed additional income under the same category for a couple of years in a row.

  75. doreen*

    You would think the IRS would notice- but they apparently won’t , or at least not quickly. My husband’s employer used to “reimburse” the sales rep’s expenses and report it on a 1099 for non-employee compensation- and reimburse is in quotes because it wasn’t really a reimbursement, it was just a flat rate per pay period. Which is perfectly fine for them to do, but it’s supposed to be reported on the W2. He finally got them to stop doing that when we didn’t receive the 1099 and we got audited when the income wasn’t reported -apparently that was the point where the finance people were able to convince the owner that the company might get in trouble if they started looking at all the sales rep’s tax returns. But even then, the IRS didn’t notice that he had a 1099 and a W2 from the same employer.

  76. TM*

    This particular situation is shady as fuck but something similar happened to me and my boss.

    She tried to get me a raise but was only able to secure one at the end of the year and it wasn’t retroactive. So she asked me what the difference in pay would have been and she gifted me $1200 cash a few weeks later. It was a one time thing and I was very grateful. I stayed there for a few more years until shortly before she retired.

  77. Alton Brown's Evil Twin*

    Any firm that emulates the business practices from L.A. Law is going to have problems.

    **Multiple** bosses and employees do this? Nope, nope, nope.

  78. MissBaudelaire*

    All aboard the Nope Train to Screw Thatville!

    This is a big old scoop of yikesaroni and cheese.

    I cannot see this ending well for you, OP.

  79. Boof*

    OP, if you can possibly afford to
    — start jobseaching now, and don’t bother to be subtle about it
    — don’t accept more under the table dealings (again, if you can afford it) – only accept an actual offiical pay increase
    — consider getting out at the first good opportunity anyway even if they do increase your salary.

  80. Too old for this*

    OP, I strongly urge you to Zelle the entire amount you have received back to yr manager and get out ASAP. Your bank account will take a hit but at least you won’t be looking over yr shoulder waiting for the IRS to appear.

  81. Cat named Brian*

    $6000 a year is pretty hefty sum to pay an employee. I’ve bought my employees lunch as a well done and on holidays because of our rules. Maybe $600 total. Can’t imagine $6000. How can multiple managers being doing this?

  82. Former Auditor*

    Going with the theory others have mentioned, that the managers are expense reporting the money, that’s beyond creative accounting. The technical term is “cooking the books”. Is this a publicly traded company that files SEC financial reports?
    1) They are understating personnel costs, which throws off various financial analysis measures. Having the expenses recorded elsewhere doesn’t really offset that issue.
    2) They are “saving” money at the employees’ expense by not paying payroll taxes on the misclassified wages. If the employees report the income, they will have to pay those taxes at self-employment rates.
    3) They are filing false tax reports every time they forward their withholding taxes. That’s at least monthly, and probably every payday. Likewise, the state UI tax reports, so they’re going to have both the state department of revenue and the IRS on their case.
    4) They are issuing false W-2s, and reporting those to the IRS. Social Security will also take a dim view of this.
    5) Workers Compensation insurance is related to total payroll, so they’re not getting that right, either.
    6) The SEC really frowns on deliberately fraudulent financial statements. They get nasty about even honest mistakes, let alone deliberate lies.
    7) If there are any bank loans, there are probably covenants with the banks that they are skirting, at the least.

    You do NOT want to be working for this company when their house of cards starts to collapse.

    1. Observer*

      You do NOT want to be working for this company when their house of cards starts to collapse.

      Yes.

  83. Observer*

    OP, get out of there. NOW, if you can.

    If you really can’t afford to leave without a job lined up, start saving you head off, give yourself a hard deadline to leave, and start looking NOW. Preferably without taking any more of your manager’s money.

    The reason here is NOT your concern for your manager (who deserves none, from what I can see), but your safety. One of these days the lid is going to get blown off on this mess of tax fraud, and if you are still there, taking that undeclared income, you will be collateral damage.

    Even if you never say anything, you have no idea how something like this could blow up. There are soooo many ways I’ve seen, that it’s not even funny.

  84. pcake*

    Wow!

    I’d guess that employees are routinely underpaid, since several left for other companies, apparently raises aren’t in the cards to retain good employees, and managers are overpaid since multiples can afford to pay employees hundreds of dollars a month every month.

    There’s so much wrong here, as others say, that it’s jaw-dropping.

  85. Entertainment*

    OP mentions he/she is in the entertainment industry. Not sure of the specifics, but I have my guesses as to their role. There area LOT of companies in the entertainment industry that require 1-2 years experience as an agent assistant as a pre-requisite to be considered for many roles (even if those roles are not agency-specific). Those asst jobs tend to be quite low paying (just over minimum wage is not atypical due to the number of people that want those roles and the fact that they have a never-ending stream of candidates that need them to be considered for other roles in the industry). It’s pretty typical for there to be very high turnover due to the fact that many people use them as a stepping stone into other roles. Pretty much folks that actually want to pursue a career as an agent specifically are the only ones who stay longer.

  86. Mala*

    The CFO at a previous job used to pay us bonuses / variable comp thru an AP “reimbursement” check. These could range into the tens of thousands. No taxes, cash money. When she retired, the new CFO made sure we got revised W2s to reflect several years worth of bonuses payments w/no taxes and threatened to fire us (the whole finance team) for agreeing to the previous bonus structure. Fun times.

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