No Papers so no Wages? No Way, Says the New Jersey Supreme Court

New Jersey’s Wage and Hour Law (WHL) requires that employers pay the minimum wage established by law and an overtime premium for work in excess of 40 hours per week. New Jersey’s Wage Payment Law (WPL) requires that employers pay the full amount of wages due at least twice per month. Both laws broadly cover anyone “suffered or permitted to work by an employer.”¹

The federal Immigration Reform and Control Act of 1986 (IRCA) makes it “unlawful . . . to hire . . . for employment in the United States an alien knowing the alien is an unauthorized alien . . . with respect to such employment.”² Continuing the employment of an undocumented individual is also prohibited under the IRCA. The IRCA does not explicitly prohibit paying wages to undocumented individuals, however. 

On March 19, 2026, the New Jersey Supreme Court, in a unanimous decision, held that employers are required to pay undocumented individuals whom the employer permits to work in accordance with the WPL and WHL, regardless of that individual’s undocumented status. The court also held that employers cannot shirk their obligations under the WHL and WPL through creative barter arrangements that do not involve the exchange of currency.

Background 

In Lopez v. Marmic, a realty management company hired an undocumented individual (the plaintiff) to work as a superintendent for two buildings. The individual used an invalid Social Security Number (SSN) on a W-4 form when he applied for the position. The company initially compensated the plaintiff through wages and use of an apartment. However, after the first two weeks of employment, the company discovered that the plaintiff had provided an invalid SSN. Rather than terminating his employment, the company informed the plaintiff it could not legally pay him but offered to let him continue living in the apartment for free in exchange for continued performance of his duties as superintendent. The company terminated its relationship with the plaintiff several years later. The plaintiff filed a wage claim with the New Jersey Department of Labor and Workforce Development, which was settled at a reduced amount, with the understanding that the plaintiff could file a lawsuit for the balance. The individual proceeded to file suit. 

The trial court dismissed the plaintiff’s claim, finding that he was not credible because he provided a false SSN, and because the plaintiff did not produce sufficient evidence regarding the number of hours worked. The company kept no records relating to the plaintiff’s hours worked, but the trial court found no fault in that. The trial court permitted testimony related to the invalid SSN, but not as to his immigration status. Nevertheless, the trial court observed that the plaintiff knew he was not qualified to earn wages because he was not legally able to work in the United States. 

On appeal, the appellate division upheld the trial court’s decision. The appellate division held that an undocumented individual is not eligible to work under federal law, and as a result no employer-employee relationship existed between the parties. The appellate division further found that the plaintiff failed to offer any documentation supporting his alleged damages. The appellate division also concluded that a barter arrangement existed between the parties, not an employer-employee relationship. 

The New Jersey Supreme Court Concludes the Plaintiff Is Entitled to Pay

The New Jersey Supreme Court reversed. The court disagreed with the defendant’s interpretation of Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137 (2002), which precluded an undocumented individual from recovering backpay. Rather, the NJ Supreme Court joined other jurisdictions in concluding that while Hoffman prevented the recovery of backpay for unearned wages by an undocumented individual, it did not prohibit payment of wages for work performed. To hold otherwise, the NJ Supreme Court in Lopez said, would go against the intent of the IRCA because it would incentivize employers to hire undocumented workers to avoid paying lawful wages and overtime. 

The court further rejected the company’s contention that the parties’ barter arrangement established a relationship outside an employer-employee relationship contemplated by the WHL and WPL. Additionally, while the trial court and appellate division faulted the plaintiff for failing to advance proof of hours worked, the NJ Supreme Court found that the WHL and WPL placed the burden on the company to preserve records of hours worked and wages paid, especially where it was undisputed that the individual performed work. The NJ Supreme Court remanded the case to the lower court to determine appropriate damages, including whether the company was entitled to a credit for the fair value of the apartment provided.

Finally, the NJ Supreme Court rejected the trial court’s reliance on the plaintiff’s use of an invalid SSN as a reason to dismiss the case. While not foreclosing any reference to an invalid SSN in other wage and hour cases, the NJ Supreme Court cautioned that such evidence should be excluded if it serves no purpose other than to show immigration status. Further, if used in a jury trial, a cautionary instruction should be given as to how evidence of an invalid SSN may be used. 

Implications for Employers

The NJ Supreme Court’s decision should come as no surprise. Employers should err on the side of caution when determining whether the WHL and WPL apply, and note that barter arrangements (and other creative arrangements) are not exceptions to an employer’s duty to pay wages. When faced with the discovery that a worker is undocumented, employers should seek legal advice to discuss potential options on their relationship with that employee, including an evaluation of wages owed based on the Lopez decision.