He worked as a building superintendent for three and a half years. His employer conceded he did the work. He was never paid wages after his first two weeks. The New Jersey Supreme Court just explained why that arrangement is going to cost the employer.
TL;DR: The New Jersey Supreme Court unanimously reversed dismissal of an undocumented worker’s wage claim, holding that Immigration Reform and Control Act of 1986 (IRCA) does not preempt state wage and hour laws, that a rent-free apartment does not satisfy New Jersey’s wage obligations, and that when an employer fails to keep records, the burden shifts to the employer – not the employee – to account for hours worked and wages owed.
An Apartment Is Not a Paycheck
The employee was hired in June 2015 to manage two Newark buildings owned by a realty management company. When he applied, he provided an invalid Social Security number on his W-4. The employer paid him for his first two weeks. After discovering the invalid SSN, the owner told the employee he could not pay him wages because that would be “against the law.” Instead, the employer offered a rent-free apartment with utilities covered in exchange for continued labor.
The employee kept working until December 2018 – cleaning common areas, removing snow, painting apartments between tenants, fixing pipes, and handling other maintenance. At trial, the employer agreed the employee had performed all of it. The employer just hadn’t kept any records of hours worked or wages paid. None.
The trial court dismissed the wage claim, finding the employee not credible because he had knowingly provided an invalid SSN, and faulting him for failing to produce time sheets. The Appellate Division affirmed.
The New Jersey Supreme Court reversed unanimously.
Three Holdings Every NJ Employer Needs to Know
The Immigration Reform and Control Act of 1986 (IRCA) bars employers from hiring undocumented workers. The court held it does not bar paying wages for work already performed. Requiring payment for completed work actually advances IRCA’s goals – it eliminates the financial incentive to hire undocumented labor in the first place.
A barter arrangement is not a wage. The employer argued the rent-free apartment created a legally distinct relationship outside New Jersey’s wage and hour laws. The court rejected that. New Jersey’s Wage Payment Law makes any agreement to pay wages “otherwise than as provided” in the statute null and void. An apartment is not a paycheck.
When the employer has no records, the burden flips. New Jersey law requires employers to keep records of hours worked and wages paid. When they don’t, a rebuttable presumption applies: the employee is presumed to have worked for the period and at the rate alleged, and the employer must come forward with evidence to rebut it. The trial court got this exactly backwards – it faulted the employee for not producing records the employer was legally required to keep.
For NJ employers, the combination of these holdings is significant. No records means no ability to contest the employee’s account of hours worked – and that exposure runs regardless of whether the worker was authorized to be employed.
If You Employ People in New Jersey, Read This Section
- Keep records. New Jersey requires employers to maintain records of hours worked and wages paid. If you don’t, and an employee files a wage claim, a presumption runs against you on the amount owed. This applies regardless of immigration status.
- A barter arrangement does not satisfy wage obligations. Housing, meals, and other in-kind benefits don’t substitute for wages unless properly credited against an hourly rate. Creative payment structures don’t create exceptions to the wage laws.
- Undocumented status does not reduce what you owe for completed work. Employing someone without authorization and then withholding wages is not a legal gray area. The fact that someone lacked work authorization does not reduce what you owe them for work they already performed.
Employing someone for three and a half years without paying wages is not a business model. It is a liability. The New Jersey Supreme Court just made sure everyone understands that.