Or any other currency.
Granted, withholding would be a problem.
When was this issue settled (if it was)?
Why would here be such a law? What purpose would it serve?
No reason they couldn’t. Many American companies do pay their American employees in other currencies when stationed at overseas offices.
For tax purposes the exchange rate in effect on payday is used to convert the pay to USD. Employees stationed overseas often do not have any withholding for US taxes (though may for local taxes).
I work and live in China. I’m not paid in RMB yuan; I’m paid in USD. China has no problem with it, as long as the taxes are paid. Canada and Mexico haven’t had problems with it, either. And when our foreign coworkers are living in the USA, they’re still paid in their native currencies. As long as the IRS gets its share, the currency doesn’t matter. Currencies are convertible.
For certain classes of employees, we have currency splits, i.e., part of your pay is deposited in your native currency in your home country, and part in the national currency in your host country. But again, nothing really changes. You simply convert the currencies.
Was there ever a law passed or a court ruling in the US that companies couldn’t pay their employees in script?
What about a law to say they have to pay their employees in US dollars if the employee wishes? You’d think there’s be a law to stop employers coming into work one Friday and saying “Hey guess what? You’re all getting paid in gourdes today! I hope you all brought bags because it’s a lot of coins!”
Once you had the job and there was a history oy payment in dollars, you could argue that you had an implied contract that work woukd be paid in USD. Future work, absent an agreement to the contrary, could be in any currency. Negotiate something you can live with or find another job.
For many years I worked for a Dutch company yet was paid in US dollars. I lived and worked in the US.
So I don’t see why the reverse wouldn’t be true for someone who worked in Europe for a US company.
Oh, man, I remember gourdes from when they were pegged to the US dollar. They’ve really inflated since then. 
It’s scrip, not script.
I wonder if minimum wage laws would come into play. In other words, I’m entitled to $7.25 US dollars per hour. I don’t have the wording of the law, but if my employer were to pay me in chickens valued at $7.25 per hour, I would argue that he must pay me $7.25, not the equivalent of…
Well, if you work for them they have a debt to pay you for your work. You are only required to accept legal tender for a debt. Is anything except USD legal tender for them to pay you in? Working under the assumption that you want to be paid in USD. If you want to be paid in euros or chickens, and they’re willing to pay you in euros or chickens, well…
Now, if they were paying you in advance, then that wouldn’t be a debt, and they could try to pay you in whatever they wanted, but if you wanted USD, chances are after they’ve attempted to pay you in chickens or euros, you’d just tell them to pound sand and you’re not working there.
Scrip by definition is “not legal tender” according to Wikipedia.
This suggests that scrip acceptance is voluntary but not illegal.
http://www.agscrip.com/index.php?option=com_content&view=article&id=3&Itemid=6
So the question is - does the recipient have a choice?