Key Takeaways

• The New Jersey Supreme Court ruled that employers cannot evade state wage obligations based on a worker’s undocumented status in violation of federal immigration law.
• Employers who knowingly hire or retain undocumented workers must still comply with state wage obligations, regardless of conflicting federal law or alternative compensation agreements.
• The decision increases legal exposure for employers violating state wage laws based on immigration status.

In Lopez v. Marimac LLC, the New Jersey Supreme Court closed the door on a long-debated defense in wage disputes: an employee’s undocumented status. On March 19, 2026, the Court clarified the relationship between immigration status and state wage-and-hour compliance, holding that employers cannot use undocumented status to avoid paying wages.

The case arises from an undocumented worker hired in 2015 by the owner of a realty company. After learning of the worker’s immigration status, the employer stopped paying wages and instead offered rent-free housing, claiming that paying formal wages would be “against the law.”

Tension Between Federal and State Law

The IRCA prohibits employers from hiring or continuing to employ individuals not authorized to work in the United States. These prohibitions apply even after an employer becomes aware of a worker’s unauthorized status. Notably, the statute does not expressly prohibit paying wages for work already performed.

The New Jersey Supreme Court’s ruling affirms an impactful proposition: immigration status does not excuse noncompliance with state wage laws. The Court focused on the plain language of the New Jersey Wage Payment Law (WPL) and Wage and Hour Law (WHL), neither of which expressly excludes undocumented workers from their purview. Instead, employers who violate the IRCA must still pay workers for work performed, regardless of immigration status or alternative barter agreements.

The Court reasoned that finding otherwise—that federal law preempts state wage and hour protections—would “incentivize employers to hire undocumented immigrants and pay reduced wages.” Enabling this practice would undermine the IRCA’s core objective of preventing the hiring of undocumented immigrants.

Expanding Worker Protections in New Jersey

The decision aligns with New Jersey’s broader policy trend toward strengthening protections for immigrant workers. For example, New Jersey continues to actively enforce wage-and-hour laws through initiatives like its “Workplace Accountability in Labor List,” which publicly identifies employers with outstanding wage liabilities.

Against this backdrop, the Court’s ruling aligns with a consistent policy direction: ensuring that all workers—regardless of status—are covered by baseline employment protections.

Implications for Employers

The decision underscores the risks of employing undocumented workers while failing to comply with state wage laws.

Employers should note several practical implications of the decision, including:

• Increased Litigation Risk: Undocumented workers may be more likely to bring wage claims using the rationale of Lopez not only in New Jersey, but also in other states.
• Elimination of a Common Defense Strategy: Arguments that wage obligations do not apply due to a worker’s unauthorized status are unlikely to succeed in New Jersey courts.
• Compliance is Status-Neutral: Pay requirements, overtime calculations, and recordkeeping requirements apply to all employees, regardless of work authorization status in New Jersey.
• Heightened Enforcement Exposure: Violations involving undocumented workers may attract additional scrutiny from regulators.

Next Steps for Employers

Given this recent ruling, it is recommended that employers operating in New Jersey:

• Conduct wage-and-hour audits to ensure compliance across all employee categories
• Review policies and training to eliminate any status-based pay disparities
• Strengthen documentation and payroll practices
• Consult counsel when addressing workforce compliance issues involving immigration considerations.

For questions and assistance regarding this decision and its impact on employers, please contact your Polsinelli attorney.