By Payroll and Entitlements Editorial Staff
The New Jersey Governor on February 4 signed legislation to raise the state minimum wage through a series of gradual increases to $15 per hour by the year 2024. The bill (A-15), is expected to grow the economy and raise wages for over one million New Jersey workers. The State Legislature approved the measure on February 1.
The current minimum wage in New Jersey is $8.85 per hour. Under the new law, the base minimum wage for New Jersey workers will increase to $10 per hour on July 1, 2019. By January 1, 2020, the statewide minimum wage will increase to $11 per hour, and then will increase by $1 per hour every January 1st until it reaches $15 per hour on January 1, 2024.
The state minimum wage will apply to private employers and to state and local government employers, including school districts, with six or more employees. For smaller employers and those in agriculture, smaller increases would occur over a longer period of time.
Small employers (less than six employees.) For employees of smaller employers with less than six employees and those employed in seasonal employment, other than employees who receive tips, the increases will be based on increases in the cost of living (CPI-W, calculated for the 12-month period prior to the September 30 preceding that January 1). However, the following rates will apply if the rate exceeds the rate determined in the CPI-W for that indicated year: $10.30 per hour, January 1, 2020; and an increase of 80 cents each January 1 from 2021 to 2025; in 2026, by 70 cents per hour; and then, for years 2026 to 2028, based on CPI-W plus one-half of the difference between $15.00 per hour and the minimum wage in effect for 2026, to reach the same minimum wage for larger employers by 2028.
Cost of living. The bill incorporates previous constitutional changes that provided for annual increases in the minimum wage based on the cost of living, as measured by the CPI-W (September 30), that resulted in the current minimum wage rate of $8.85 per hour as of January 1, 2019. The bill also provides that for any year where the federal rate is higher than the state minimum wage rate, the state minimum wage would then increase to the higher federal rate and any subsequent increases based on the cost of living (CPI-W) would be applied to the higher rate.
Tip credit. Employers with tipped workers would be entitled to a credit for tips received by the worker against the hourly minimum wage rate that the employer pays, as follows:
- $6.72 from January 1, 2019, to June 30, 2019;
- $7.37 after June 30, 2019, and before January 1, 2020;
- $7.87 during 2020, 2021, and 2022;
- $8.87 during 2023; and
- $9.87 during 2024 and subsequent years.
Piece-rate and agricultural workers. Employees who are paid a piece rate or who work on a farm would also see future increases based on the cost of living, except that the following rates would apply if the rate exceeds the rate determined based on the CPI-W for the indicated year: $10.30, January 1, 2020; $10.90, January 1, 2022; by 80 cents on January 1 between years 2023 and 2024; $13.40 on January 1, 2025; by 80 cents each January 1 from 2026 to 2027; and based on increases in the cost of living for years 2028 to 2030, plus one-third of the difference between $15.00 per hour and the minimum wage in effect in 2027, so that by 2030, the minimum wage rate for these employees would be the same as for larger employers. No later than March 31, 2024 (the rate in agriculture will then be at $12.50 per hour), the New Jersey Labor Commissioner and Secretary of Agriculture will jointly decide whether to recommend that the minimum wage for agricultural workers increase to $15 per hour by January 1, 2027, as specified in the bill. If they cannot come to an agreement, a third member, appointed by the Governor with the advice and consent of the Senate, will break the tie. If there is a recommendation to disapprove of the scheduled increases or suggest an alternative pathway, the Legislature will have the ability to implement that recommendation by passage of a concurrent resolution.
Training wage. Effective beginning January 2020, employers will be able to pay a training wage of not less than 90 percent of the minimum wage to an employee who is enrolled in an established employer on-the-job or other training program that meets standards set by regulations of the Commissioner of Labor and Workforce Development. The training wage would apply to the first 120 hours of work after hiring the employee in an occupation in which he or she has no previous similar or related experience.
Tax credits. The bill calls for a program to be established in the Department of Labor and Workforce Development, administered by the Commissioner, to provide tax credits to employers of employees with impairments to help offset the cost the employer of any wage increases for those employees, including the cost of increases in payroll taxes that the employer paid on those workers’ wages. This would apply to private, nongovernmental employers, including nonprofits. An employee with an impairment is one whose work capacity is significantly impaired by age or physical or mental deficiency or injury and who is found eligible for personal assistance services or prescribed drugs that, without, the individual would be unable to perform the essential functions of the job.
Overtime exemption. In addition to minimum wage rate changes, the bill adds an exemption to the standard overtime requirements of payment of one and one-half times the employee’s regular rate of pay for each hour of working time in excess of 40 hours in a week for those employed in a bona fide executive, administrative, or professional capacity, which is consistent with federal requirements.
Reports. The bill also calls for the establishment of a “Task Force on Wages and State Benefits” to study and evaluate and issue annual reports on the impact of the changes in this measure, including the impact on eligibility of low-income and other disadvantaged workers on social services. In addition, the commissioner is to post, not later than September 30, 2024, on the Department of Labor and Workforce Development Internet website a report that evaluates the impact on employers and employees on the employer tip credits, as well as a report that evaluates the impact of any employer tax credits provided to employers with impairments. (A.B. 15 (Ch. 2019-32) Laws 2019, approved and effective February 4, 2019; State of New Jersey, Office of the Governor, Press Release, February 4, 2019.)
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