Cash Wages Law and Legal Definition

Cash wages means any type of remuneration that comes in the form of spendable money such as check, cash, money order, or direct deposit to an employee by an employer for services rendered. The value of food, lodging, clothing or other noncash items provided to the employee is not considered as cash wages. Moreover, compensation packages such as stock and stock options, insurance and fringe benefits are also excluded from cash wages.

Generally, the cash wages are subject to some form of taxation at the federal and state level. For taxation purpose, the cash wages are treated as the recipient’s ordinary income. It is inevitable that the employers must withhold payroll taxes and report employee wages. However, some workers and employers make cash wages 'under the table' to evade the payroll taxes. This is illegal and may result in criminal prosecution.