Your employer doesn't need to lie, you need to not get audited. Even if both you and your employer lie they will have cash flow discrepancies.
As I mentioned, there are more defensible reasons for only having one party lie, like avoiding CA's (future?) claim that paying someone who lives in California implies you hired them in California and need to incorporate in California.
As I mentioned, there are more defensible reasons for only having one party lie, like avoiding CA's (future?) claim that paying someone who lives in California implies you hired them in California and need to incorporate in California.