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If back pay (wages) is awarded in a class action settlement, who is responsible for reporting the wages and payroll taxes?

April 26, 2017Action class pay payroll responsible taxes wages

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If back pay (wages) is awarded in a class action settlement, who is responsible for reporting the wages and payroll taxes?

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When a class action litigation involves wage and hour issues and the settlement requires back pay to be made by a third-party administrator, the employer of the workers (the defendant) is responsible for reporting subject wages and paying Unemployment Insurance, Employment Training Tax, and State Disability Insurance. The third-party administrator who controls the payment of the back pay is responsible for reporting Personal Income Tax (PIT) wages and withholding PIT from the payments. There are other complex issues associated with back pay. Please call (888) 745-3886 for more information.