New Jersey Becomes the Fourth State to Raise the Minimum Wage to $15/hour

March 12, 2019

On February 4, 2019, Governor Phil Murphy signed a bill that gradually raises the minimum wage to $15 per hour by the year 2024. However, the law does include separate requirements for some sectors of the workforce, such as farmworkers, seasonal workers, tipped employees, and employees of businesses with less than six workers, who will have to wait longer to reach the $15 threshold. The law applies to private employers of all sizes, as well as public employers, specifically the State and all counties, municipalities and school districts. 

 

The gradual raise in minimum wage for each workforce sector is set forth as follow:

 

  1. With the exception of employees listed below, the bill raises the current $8.85 minimum wage to $10 an hour on July 1, 2019; $11 an hour on January 1, 2020; and then increases by $1 every subsequent January 1st until reaching $15 per hour in 2024.  Once the minimum wage reaches $15 in 2024, it will continue to increase based on the national consumer price index.

  2. Seasonal workers, defined as individuals whose job falls in the period of May 1 to September 30, and employees of a small employer who have less than six employees, will see their minimum wage reach $15 an hour in 2026. The bill raises the current minimum wage to $10.30 an hour on January 1, 2020; $11.10 an hour on January 1, 2021; $11.90 an hour on January 1, 2022; $12.70 an hour on January 1, 2023; $13.50 an hour on January 1, 2024; $14.30 an hour on January 1, 2025; and finally reaches $15 an hour on January 1, 2026.

  3. Farmworkers will see an increase to $12.50 per hour by January 1, 2024, with the possibility of rising to $15 per hour by 2027 if recommended by the New Jersey Labor Commissioner and Secretary of Agriculture.

  4. Tipped Employees will see an increase from $2.13 per hour to $5.13 per hour in 2024. However, employers will have to make up the difference between $2.13 and $8.85, if the employee does not make that standard hourly minimum amount in tips. Meaning, the cash wage received, $2.13 per hour, plus any tips within that same hour should equal at least $8.85 for each hour the tipped employee works. In contrast, where an employee’s hourly earnings, which include cash wage and tips equals to or exceeds the minimum wage, the employer can credit $6.72 of the received tips against the employee’s hourly wage of $8.85, so it will only have to pay $2.13 in cash wages for that hour.

  5. Beginning in 2020, employers are required to pay a “training wage” equal to at least ninety percent of the minimum wage for the first 120 hours of work after hiring an employee in a training program.

 

As a result of the gradual increases set forth above, there were major concerns by the legislation drafters that employees with disabilities would probably be the first employees laid off as a result of these increases. In order to encourage businesses to retain or hire workers with disabilities, the bill sets aside $10 million in new tax breaks. Specifically, if a business has to pay a disabled employee more in the current year than in the previous year because of the wage increase, that employer could count the pay difference as a tax credit against the taxes the employer already owes. The tax credit would be applicable to any wages paid after January 1, 2019.

 

The passage of this law is a monumental victory for workers in New Jersey and Governor Phil Murphy continues to fulfill his major campaign promises to protect workers and workers’ rights in the State. If you have any questions about the gradual increases, feel free to contact the experienced attorneys at the Zazzali Firm for more information.

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