How Will The Proposed Minimum Wage Increase Impact New Jersey Businesses?

How Will The Proposed Minimum Wage Increase Impact New Jersey Businesses?

New Jersey’s minimum wage would gradually increase over the next six years to $15/hour under a bill recently introduced in the Legislature. The legislation, introduced by Assembly Speaker Craig Coughlin, seeks to balance the interests of workers and the business community.  However, it will likely remain controversial.

New Jersey Wage Increase Legislation

The bill provides that, for most workers, the minimum wage rate would increase over time until it eventually reaches $15/hour.  The increase would begin with wages up to $9.50 per hour on July 1, 2019, to $11.00 per hour on January 1, 2020, and then increase by $1.15 per hour on January 1 of each year from 2021 to 2024, reaching a level of $15.00 per hour in 2024. 

The bill contains several exceptions that would slow wage increases for certain classes of workers, including workers under the age of 18, farm laborers, seasonal workers, and workers at businesses with fewer than 10 employees. For those workers, the minimum wage rate would be increased to $10.10 per hour on January 1, 2020, to $10.35 per hour on January 1, 2022, to $10.70 per hour on January 1, 2023, to $11.10 per hour on January 1, 2024, to $11.70 per hour on January 1, 2025, to $12.45 per hour on January 1, 2026, to $13.20 per hour on January 1, 2027, to $14.10 per hour on January 1, 2028, reaching a level of $15.00 per hour on January 1, 2029. 

The bill defines “seasonal employment” as employment for which, during the previous calendar year, not less than two-thirds of the employer’s gross receipts were received in a continuous period of not more than thirteen weeks.  Meanwhile, “small employer” means an employer who employed less than ten employees for every working day during a majority of the calendar workweeks in the current calendar year and the preceding calendar year.

As for tipped workers, businesses who employ workers who customarily and regularly receive gratuities or tips would be entitled to a credit for the tips received by the worker against the hourly minimum wage rate paid to the worker in the following amounts: after December 31, 2018 and before July 1, 2019, $6.72 per hour; after June 30, 2019 and before January 1, 2020, $7.37 per hour; during calendar year 2020, $7.87 per hour; during calendar year 2021, $7.42 per hour; during calendar year 2022, $7.57 per hour; during calendar year 2023, $8.72 per hour; during calendar year 2024 and subsequent calendar year, $9.87 per hour. 

Minimum Wage Hike Will Affect New Jersey Businesses

In the New Jersey Business & Industry Association’s 60th Annual Business Outlook Survey, the NJBIA polled member businesses about the impact of a potential increase in the state’s minimum wage.  Of the respondents, 66 percent said a minimum wage hike will impact their business. In addition, 39 percent said the impact would be significant.

Approximately one third of businesses reported that they would need raise prices to offset the increased costs associated with raising the minimum wage. Another quarter stated that they would reduce staff and/or hours.

Likelihood of Passage

While Gov. Phil Murphy has made raising the minimum wage to $15 a top priority, he has previously stated that he wants the change implemented with no exceptions. Senate President Stephen Sweeney supports the plan. “The Speaker’s legislation gives us a working document that will move our efforts to enact a needed wage increase forward,” Sweeney said.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Scott Heck, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.