In accordance with an agreement reached between the Governor and legislative leaders earlier this month, the New Jersey Legislature approved legislation, A-15 (the “Bill”), on January 31, 2019 to increase the state hourly minimum wage requirement from $8.85 to $15 over a five (5) year period. The Governor is expected to sign the Bill into law on Monday, February 4, 2019.
As discussed in a previous post, the Bill requires most employers to phase in the wage increase over the next five (5) years as follows:
- On July 1, 2019, the minimum wage will increase to $10 per hour;
- On January 1, 2020, the minimum wage will increase to $11 per hour;
- For each year thereafter, the minimum wage will increase by $1 per hour every January 1 until it reaches $15 per hour on January 1, 2024;
- For any year, in accordance with the State Constitution, that the consumer price index adjustments for all urban wage earners and clerical workers (referred to as "CPI-W") are higher than the staged increase, the minimum wage will follow the CPI-W increase, taking effect on the first of every year; and
- Starting in 2020, employers are able to pay "training wages" equal to at least 90 percent of the minimum wage for the first 120 hours of work by employees enrolled in a training program.
The Bill allows for an extended phase-in of the wage increase to employers of seasonal workers and small businesses. Under the Bill, a “seasonal worker” is defined as an employee whose employment occurs only during the period between May 1 to September 30, and a “small business” is defined to include a business with fewer than six (6) workers. The Bill requires employers of seasonal workers and small businesses to phase-in the wage increase as follows:
- On January 1, 2020, the minimum wage will increase to $10.30 per hour;
- For each year thereafter, the minimum wage will increase $0.80 per hour every until reaching $14.30 in 2025; and
- Thereafter, on January 1, 2026 the minimum wage will increase $0.70 to $15 per hour.
After 2026, wage increases will correspond to the CPI-W, plus separately calculated marginal increases so that the minimum wage for "seasonal workers" and employees of "small businesses" is the same as all other employees by 2028.
Moreover, the minimum wage will increase for employees that earn tips. Such employee’s hourly minimum wage will increase from $2.13 to $5.13 an hour. That wage combined with the employee’s tips must equal the standard hourly minimum wage.
The wage increase will not apply to farm workers. Instead, farm workers' minimum wage will increase to $12.50 in 2024. Thereafter, it will be up to state officials to decide whether to increase the minimum wage for farm workers to $15 by 2027.
The Bill also allows up to $10 million in tax credits annually for businesses that hire workers with disabilities.
For additional information about the minimum wage increase and the impact on your business, please contact the attorneys in Parker McCay's Corporate Department.
The content of this post is for informational purposes only and should not be construed as legal advice or legal opinion. You should consult a lawyer concerning your specific situation and any specific legal question you may have.