No, it is not legal at all. Employees must be paid for working, and in NJ, they must generally be paid within 2 or so weeks of doing the work. (I.e. NJ requires a semi-monthly or biweekly payroll schedule.) Therefore a company may *not* withhold an employee's pay indefinitely. There are legal ways to get everyone "synched up"--furlough employees for a few days, then bring them back at the start of a new pay period; have a partial payroll or shorter pay period to get everyone on the same schedule (you can always pay people *more* often than required); etc. But withholding a week of pay, potentially for years, is not a legal mechanism to accomplish this.