Sorry, but yes, you are hurting yourself in many ways by not reporting all of your wages—regardless of whether your employer does it or not.
For starters, it is illegal. You may be prosecuted for failing to pay taxes on your income. You are also more protected by paying taxes on your income and should insist that your employer report them. Added benefits for doing so include the potential for Social Security Retirement, Social Security Disability, and—yes indeed—your potential to be covered by Workers’ Compensation.
If there is no record of your having been employed, it may obviously be difficult to prove that you were an employee. Your employer may argue that you were an independent contractor and you could potentially be denied workers’ compensation.
Even if you are successful in filing a claim, you will have a hard time proving your income, as there is no proof of how much money you were earning per week and this is the figure that the Bureau of Workers’ Compensation uses when an injured worker is incapable of working. If you are being paid under the table, you would also not be entitled to any unemployment because you cannot prove that you were employed and being paid.
Let’s say you’re a waiter or a hair stylist and you do not report your tips as income. Again, not reporting this income is illegal. Under Ohio law your rate of compensation is based upon the income you report in the year prior to your injury. The average weekly wage is based upon your income for the 52 weeks prior to your injury. You would be compensated at 66 2/3% of this during the period that you area temporarily unable to work. Should you sustain an injury and be entitled to this benefit, it will be based solely on the reported income and more than likely will not include the unreported tips. So when you are off work, you will be forced to live on an income lower than what you were earning while you were working. Is this what you really want?