How not to practice law: pay your employees "under the table"

Here is a new addition to our running commentary on how NOT to practice law. For the most recent updated list of links on this topic go here.

The Legal Profession Blog is reporting today that a Massachusetts attorney has been suspended because he agreed to pay one of his employees "under the table." The Court found that by not reporting to state and federal authorities the income paid to his employee, the respondent knowingly engaged in conduct involving dishonesty, fraud, deceit or misrepresentation, in violation of Mass. R. Prof. C. 8.4(c).

In this case, the lawyer asked his new employee to sign a W-4 form, but the employee said she would prefer not to because she wanted to maintain her MassHealth benefits. In other words, the employee wished to hide her income from the state authorities so that she could continue to receive MassHealth benefits for which she otherwise might not be qualified. Understanding this, the lawyer agreed to not report the employee’s income to the state and federal authorities and paid her weekly in cash for about seven months.

Given that the neat arrangement was a secret between the attorney and the employee, you wonder how did the state find out about the misconduct, eh?

Eventually, the attorney terminated the employee's employment. Given that he had never reported her employment to begin with, she was not eligible for unemployment benefits, but, at her request, the lawyer made the appropriate payments to the state unemployment commission and acknowledged her status as a former employee. It didn't take long for the Massachusetts Attorney General’s Office to put two and two together and the lawyer was hit with a civil penalty of $2,000 and now a suspension.