Ivo is a senior associate in Obermayer’s Labor Relations & Employment Law Department. He focuses his practice on representing employers, including advising companies on how to handle employee issues, and defending employee...Read More by Author
New Jersey Update – $15/hour Minimum Wage Bill Signed into Law
On Monday, February 4, 2019, New Jersey Governor Phil Murphy signed a bill increasing the minimum wage in New Jersey to $15 per hour by the year 2024. The bill (A15/S15) would increase the current statewide minimum wage of $8.85 via successive increases, beginning in July 2019—less than five months from the date of this post. For most employers, the increases follow this schedule:
|July 1, 2019||$10.00|
|January 1, 2020||$11.00|
|January 1, 2021||$12.00|
|January 1, 2022||$13.00|
|January 1, 2023||$14.00|
|January 1, 2024||$15.00|
After 2024, the minimum wage will increase annually based on the consumer price index for urban wage earners and clerical workers (CPI-W), as calculated by the Bureau of Labor Statistics.
The law applies to private employers of all sizes, as well as the State, and all New Jersey counties, municipalities and school districts. There is no exception for employees under the age of 18. However, the law includes separate requirements for seasonal employees, farm workers, tipped workers, and employees of small businesses (defined narrowly to include only those employers with fewer than 6 employees). Seasonal employees, and employees of small businesses, are subject to a more gradual schedule of increases:
|January 1, 2020||$10.30|
|January 1, 2021||$11.10|
|January 1, 2022||$11.90|
|January 1, 2023||$12.70|
|January 1, 2024||$13.50|
|January 1, 2025||$14.30|
|January 1, 2026||$15.00|
Farm workers are subject to a more modest set of increases that top out at $12.50 per hour in 2024, with potential further increases that are subject to review by the Commissioner of Labor and the Secretary of Agriculture, and legislative approval. The minimum wage for tipped employees will also increase, from the current $2.13 per hour, to $5.13 per hour in 2024. That rate, plus the amount of tips received, must meet or exceed the standard minimum wage.
Beginning in 2020, the law allows employers to pay a training wage of at least 90% of the applicable minimum wage for the first 120 hours of work, subject to certain additional requirements, including an established on-the-job training program that meets certain standards. The new law also establishes new tax credits for employers with employees “whose work capacity is significantly impaired by age or physical or mental deficiency or injury.”
The new law, which represents a fulfillment of one of Governor Murphy’s key campaign promises, was passed with fanfare and touted by labor leaders and employee groups. New Jersey is now officially the fourth state to enact a phased-in move to a $15 minimum wage, joining New York, Washington D.C., Massachusetts and California. In the meantime, Pennsylvania’s minimum wage remains $7.25 (the same as the federal minimum), and Delaware’s minimum wage is currently $8.75 and will increase to $9.25 in October of 2019.
During the ongoing debate over these increases, employers and employer groups expressed concerns about reduced hiring, increased automation, decreased hours, and business closures as a result of a $15 minimum. However, with this law signed and on the books, New Jersey employers—particularly those employers who are subject to the increase to $10 per hour in July 2019—need to shift their focus to preparation and compliance. Employers with questions about how this law will impact their workforce should contact an attorney with experience in this area.