July 1st is Fast Approaching: Changes to New Jersey's Minimum Wage and Tip Credit

July 1st is Fast Approaching: Changes to New Jersey's Minimum Wage and Tip Credit

In January, we published an e-alert indicating that legislative leaders and Governor Phil Murphy agreed on a deal that will raise New Jersey minimum wage to $15 per hour. This deal will place New Jersey among the three other states who have committed to raising wages considerably. These other states are California, New York, and Massachusetts.

Currently, the minimum wage rate in New Jersey is at $8.85. In just over a week, on July 1, minimum wage will increase to $10 and then to $11 on January 1, 2020. Subsequently, minimum wage will increase $1 each year until 2024.  This increase will raise the incomes of more than one million people in the State.

The base minimum wage, however, will increase to $15 per hour by 2026 for small businesses with 5 or fewer employees and seasonal workers. For agricultural workers, the base minimum wage will increase to $12.50 per hour by January 1, 2024 and a special committee will review whether agricultural workers’ wages will increase to $15 per hour.

Effective July 1, there are also changes to the tip credit. The tip credit will increase to $7.37 an hour (currently $6.72 an hour), and will further increase on January 1 each year as follows: to $7.87 an hour in 2020, to $8.87 an hour in 2023, and to $9.87 an hour in 2024. Beginning July 1, the minimum cash wage for tipped employees will increase to $2.63 an hour (currently $2.13), and will increase on January 1 of each year as follows: to $3.13 in 2020, to $4.13 in 2021, and to $5.13 in 2022.

If you have questions about the increase of minimum wage and the tip credit, please do not hesitate to contact Laddey, Clark & Ryan’s Employment and Labor Practice Group: Thomas N. Ryan Esq. (tryan@lcrlaw.com), Ursula H. Leo, Esq. (uleo@lcrlaw.com), Jessica A. Jansyn, Esq. (jjansyn@lcrlaw.com), or Nicole C. Tracy, Esq. (ntracy@lcrlaw.com). Our attorneys can also be reached by phone at (973) 729-1880.