My employer has not been paying my SDI Withholding tax for the past five years; the error was discovered through an internal audit; my question is should the employer be responsible for paying the state back for the past five years. My employer is asking me to pay back the past year $1040.00; how should I handle this?
1 Answer from Attorneys
You didn't say whether the failure to pay also includes a failure to deduct. If the employer has deducted the SDI but hasn't remitted it to the state, the employer bears the full responsibility. If, however, the employer hasn't deducted the SDI from your pay, it's perhaps proper for the employer to ask the employee to accept and be responsible for the deduction retroactively. There is also a legal argument that the employer, having goofed up, cannot go after the poor employee at this stage. There is a general rule of law that when X receives a benefit from Y that X really shouldn't receive, but due to mutual mistake does, that when the mutual mistake is discovered, X doesn't need to cough up the benefit to Y IF two conditions are present: (1) BOTH parties were ignorant of the mistake at the time it was made, and (2) X has significantly changed his/her position in reasonable reliance upon the error. If you can't work it out with the employer (which I recommend trying, if you like your job), then please feel free to contact me for a no-obligation consultation.
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