New Jersey tip-credit regs are final
Wednesday, August 19, 2020

New Jersey tip-credit regs are final

By Payroll and Entitlements Editorial Staff

The New Jersey regulations the tip-credit have been finalized. In determining the minimum hourly wage an employer is required to pay a tipped employee, only the employer who is paying its employee the minimum hourly wage may take a credit for tips received by the employee against the applicable minimum hourly wage in the following amounts:

  1. For January 1, 2019 through June 30, 2019, $ 6.72 per hour;
  2. For July 1, 2019 through December 31, 2019, $ 7.37 per hour;
  3. For calendar year 2020, $ 7.87 per hour;
  4. For calendar year 2021, $ 7.87 per hour;
  5. For calendar year 2022, $ 7.87 per hour;
  6. For calendar year 2023, $ 8.87 per hour;
  7. Commencing January 1, 2024, $ 9.87 per hour.

The employer who takes a tip credit must pay to each employee against whom such tip credit has been applied, a cash wage equal to the difference between the applicable minimum hourly wage and the tip credit.

With respect to tipped employees for whom the employer does not take the tip credit, the employer must pay the employee a cash wage equal to the full amount of the applicable minimum hourly wage to which the employee is entitled.

In addition, where an employee is employed in a dual job, for example, where a maintenance person in a hotel also serves as a waiter or waitress, if he or she customarily and regularly receives at least $ 30.00 per month in tips for his or her work as a waiter or waitress, he or she is a tipped employee only with respect to his or her employment as a waiter or waitress.

If he or she is employed in two occupations, then no tip credit may be taken for his or her hours of employment in his or her occupation of maintenance person. Such a situation is distinguishable from that of a waiter or waitress who spends part of his or her time cleaning and setting tables, toasting bread, making coffee, and occasionally washing dishes or glasses.

It is likewise distinguishable from the counter person who also prepares his or her own short orders or who, as part of a group of counter people, takes a turn as a short order cook for the group. Such related duties in an occupation that is a tipped occupation need not by themselves be directed toward producing tips. However, where a tipped employee spends a substantial amount of time (in excess of 20% in the workweek) performing related duties, no tip credit may be taken for the time spent in such duties. (52 N.J.R. 1562(a) Volume 52, Issue 15, August 3, 2020).

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