United States: Get Ready New Jersey Employers, $15 Minimum Wage Is Coming!

As we cautioned on November 15, 2018, Governor Phil Murphy's top legislative priority to increase the minimum wage to $15 per hour is inching closer to a reality. On Monday, January 28, 2019, the New Jersey Assembly and Senate committees approved a bill raising the minimum wage as follows:

• $15 per hour by 2024, for most minimum wage earners;
• $15 per hour by 2026, for minimum wage earners at seasonal businesses and small businesses;
• $12.50 per hour by 2024, for agricultural minimum wage earners; and
• $5.13 per hour by 2022, for tipped earners.

The bill is scheduled for full votes in both chambers on Thursday, January 31, 2019. If passed, Governor Murphy is expected to sign the wage increases into law on the same day.

Below is a brief summary of the proposed schedules of minimum wage increases for each of the groups affected.

Regular Schedule

• Applicable to minimum wage workers unless an exception applies
• Currently: $8.85 per hour
• 7/1/19: $10.00 per hour
• 1/1/20: $11.00 per hour
• 1/1/21: $12.00 per hour
• 1/1/22: $13.00 per hour
• 1/1/23: $14.00 per hour
• 1/1/24: $15.00 per hour
• Notes:
  
  
  • After 2024, wage increases would be tied to the consumer price index for all urban wage earners and clerical workers, or CPI-W, taking effect annually on January 1 of every year.
  • If at any time the federal minimum wage rate exceeds the New Jersey minimum wage rate, then the higher federal minimum wage will be recognized and subsequent CPI-W increases will be based on that new rate.
  • Starting in 2020, employers would be able to pay "training wages" equal to at least 90 percent of the minimum wage, for the first 120 hours of work by people enrolled in a training program.

Seasonal Workers and Small Business Schedule

• Applicable to seasonal workers (employed between May 1 and September 30) and employees at small businesses (business with five or fewer employees)
• Currently: $8.85 per hour
• 1/1/20: $10.30 per hour
• 1/1/21: $11.10 per hour
• 1/1/22: $11.90 per hour
• 1/1/23: $12.70 per hour
• 1/1/24: $13.50 per hour
• 1/1/25: $14.30 per hour
• 1/1/26: $15.00 per hour
• Notes:
  
  
  • After 2026, wage increases would be tied to the CPI-W plus one half of the difference between $15.00 per hour and the minimum wage in effect for 2026 pursuant to the regular schedule. By January 1, 2028, the minimum wage for seasonal and small business employees shall be the same as the regular schedule.
  • If at any time the federal minimum wage rate exceeds the New Jersey minimum wage rate, then the higher federal minimum wage will be recognized and subsequent CPI-W increases will be based on that new rate.

Agricultural Schedule

• Applicable to employees engaged on a piece-rate or regular hourly rate basis to labor on a farm
• Currently: $8.85 per hour
• 1/1/20: $10.30 per hour
• 1/1/22: $10.90 per hour
• 1/1/23: $11.70 per hour
• 1/1/24: $12.50 per hour
• Notes:
  
  
  • In 2024, the Departments of Agriculture and Labor and Workforce Development will propose a recommendation, subject to legislative approval, regarding future changes to agriculture wages. If the Departments cannot agree, the Governor would nominate a tie-breaking member subject to Senate confirmation.
  • If at any time the federal minimum wage rate exceeds the New Jersey minimum wage rate, then the higher federal minimum wage will be recognized and subsequent CPI-W increases will be based on that new rate.

Tipped Schedule

• Applicable to employees who customarily and regularly receive gratuities or tips
• Currently: $2.13 per hour
• 7/1/19: $2.63 per hour
• 1/1/20: $3.13 per hour
• 1/1/21: $4.13 per hour
• 1/1/22: $5.13 per hour
• 1/1/23: $5.13 per hour
• 1/1/24: $5.13 per hour
• Notes:
  
  
  • An employer of a tipped employee is required to pay the amounts outlined above in direct hourly wages only if that amount combined with the tips or gratuities received at least equals the Regular Schedule hourly wage.
  • After 2024, wage increases would be tied to the CPI-W, taking effect annually on January 1 of every year.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.