N.J. Supreme Court Holds Undocumented Workers Can Recover for Wage and Hour Violations

Recently, the New Jersey Supreme Court issued a unanimous opinion in Lopez v. Marmic LLC, holding that undocumented workers are entitled to recover for underpayment under New Jersey’s wage and hour laws. The decision provides important guidance on the intersection of federal immigration law and New Jersey wage and hour protections, the legal status of barter arrangements, and employers’ record-keeping obligations.

Background

Defendants Marmic LLC, a realty management company, and Mike Ruane, its principal, hired Plaintiff Sergio Lopez as a building superintendent. Initially, Defendants paid Plaintiff a weekly salary, but after discovering that Plaintiff was an undocumented immigrant, they ceased paying him wages and instead compensated him solely by providing him a rent-free apartment. Defendants terminated Plaintiff after he had worked under this arrangement for multiple years.

Plaintiff then sued Defendants under New Jersey’s Wage and Hour Law, N.J.S.A. 34:11-56a et seq., and Wage Payment Law, N.J.S.A. 34:11-4.1 et seq., claiming that Defendants failed to pay him minimum wages and overtime. The case proceeded to a bench trial, where Plaintiff testified that he worked between thirty-seven and sixty hours per week, performing various tasks. Defendants agreed that Plaintiff performed the tasks described. Neither Plaintiff nor Defendants, however, maintained records of the hours Plaintiff worked.

The trial court found in Defendants’ favor. In part, the court reasoned that Plaintiff failed to prove the hours he worked and commented that Plaintiff was not “qualified” to be paid wages because he was an “undocumented alien.” The Appellate Division affirmed and reasoned similarly.

Undocumented Workers May Recover Unpaid Wages for Work Already Performed

The central question before the Supreme Court was whether the federal Immigration Reform and Control Act of 1986, 8 U.S.C. § 1101 et seq., which prohibits employers from hiring undocumented individuals, conflicts with New Jersey’s wage and hour laws, which require employers to pay minimum wages and overtime. The Court held that the laws do not conflict — if an employer hires an undocumented worker in violation of federal law, the employer must still properly compensate that person for work performed. The Court reasoned, in part, that holding otherwise would incentivize employers to hire undocumented workers and pay them reduced wages.

Barter Arrangements Do Not Shield Employers from Wage Obligations

Additionally, the Court rejected Defendants’ argument that their “barter arrangement” with Plaintiff, under which they provided him with a rent-free apartment in lieu of wages, was “legally distinct” from an employer-employee relationship and not subject to New Jersey’s wage and hour laws. The Court reasoned that New Jersey’s wage and hour laws apply broadly to anyone “suffered or permitted to work by an employer.” It explained further that “in-kind” payments, such as food or lodging, may be “counted toward wages” but do not relieve employers of their obligation to pay appropriate wages.

Employers Are Obligated to Keep Records of Hours Worked

Finally, the Court held that Plaintiff could recover unpaid wages from Defendants despite his failure to prove the actual hours he worked. Specifically, it noted that employers have a “legal obligation” to maintain records of wages paid and hours worked. The Court explained further that once an employee establishes that he performed work for which he was not adequately compensated, the burden of proof shifts to the employer to produce evidence of the wages paid and the hours worked. When the employer fails to do so, a “rebuttable presumption” arises “that the employee worked for the employer for the period of time and for the amount of wages as alleged in the wage claim.”

Conclusion

The Supreme Court reversed and remanded for a determination of damages in accordance with its opinion. Lopez provides important guidance for New Jersey employers: employees may recover for inadequate compensation regardless of immigration status, barter arrangements are subject to wage and hour requirements, and failure to keep records of employees’ hours can be detrimental in the event of a lawsuit.