I was employed at a small shop in New Jersey for the last 4 years. My co-workers and I were all hourly employees being paid by check through a payroll company (ADP).
Tax, SSI, UED, Med, IRA, dedections were all recorded on our pay stubs.

In March 2008, our employer stopped using the payroll company and started paying us with his own company checks. These checks were written out for our net amount (after deductions), but pay stubs were not provided despite repeated requests by several of us employees.

In July 2008, the company went back to using the payroll company, and stubs showing our deductions were once again provided. The year to date earnings on our stubs however are now missing 4 months of earnings. Anonymous calls were made to the Dept. of Labor, and they came in to investigate. They were not shown these company checks.

Our employment has now ended, and I applied to collect unemployment. We apparently are not entitled to the full benefit because of these missing wages. I recently called my former employer to confront him about not reporting our wages, and he told me we're all getting a 1099.

I filed an appeal with N.J. Unemployment, as well as a formal complaint to Department of Labor.

My question is...

Can he do this? Is it legal?
Thank you in advance,