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freeezer · Jun 29, 2011, 12:21 PM

Hello,
My employer forgot to withhold FICA taxes for the last 3 years. Now that he realized it, he asked to reimburse him (he had to pay the "balance" immediately to the IRS after he found out). I looked up the publication 15 under "Collecting underwithheld taxes from employees" at http://www.irs.gov/pub/irs-pdf/p15.pdf (page 28) and it says that reimbursement is a really a matter for settlement between the employer and employee. Anyway I accepted to reimburse him and we agreed on a payment plan. But now my employer wants me to sign a contract saying that "I acknowledge having incurred a debt to the Company". I am not sure this is true as the publication states that the Company owes the underpayment not me. The only reason I accepted is because I was told by a fellow coworker that I would be let go if I refuse.
I would like to know if there is any validity to such a contract. The contract also stipulates that I have to pay the full amount if I quit or am terminated, which I think is unfair

Any feedback would be greatly appreciated.
Thanks

ebaines · Jun 30, 2011, 11:44 AM

He can not legally require you to pay FICA taxes that he neglected to withhold from your pay prior to the current calendar year. Whether you agree to reimburse him or not for his mistake is strictly your call. If you are willing to do that, just tell him so verbally - but do NOT sign a contract. You especially don't want to sign anything that says YOU have incurred a debt, because you haven't. And especially don't sign anything that obligates you to pay him if you are terminated by him - that's nuts.

freeezer · Jun 30, 2011, 01:43 PM

Thank you Ebaines, now the question is: is my employer entitled to terminate me because I refuse to pay him?

ebaines · Jul 1, 2011, 04:35 PM

Most states have "employment at will" rules, which means that unless you have an employment contract (or are a member of a union that does) you work at the mutual consent of you and your employer. So yes - they can fire you at will (unless you are a member of a protected class and your termination is due to discriminantion). And you can quit at any time with no requirement for minimum period of notice.

However, the details vary by state. It may be worthwhile for you to consult with an attorney in your area who specializes in labor disputes to check it out for sure.