On February 4, 2019, Governor Phil Murphy signed legislation which will raise the minimum wage in increments culminating in a minimum wage of $15 per hour on January 1, 2024. The new law puts New Jersey at the forefront of the “living wage” movement, while the phase in is designed to lessen the impact on small businesses. The new law amends the New Jersey Wage and Hour Law, which governs minimum wage and overtime requirements.
The legislation is the result of negotiations between the Governor and Legislature lasting more than a year. The amendment was praised by labor unions and most Democrats in the state, but opposed by the New Jersey Chamber of Commerce and most Republicans.
The New Rates and Their Effective Dates
The new wages will be implemented according to the following schedule.
|January 1, 2019||$8.85 per hour|
|July 1, 2019||$10 per hour|
|January 1, 2020||$ 11 per hour|
|January 1, 2021||$ 12 per hour|
|January 1, 2022||$ 13 per hour|
|January 1, 2023||$ 14 per hour|
|January 1, 2024||$ 15 per hour|
|January 1 of each subsequent year||The then existing rate shall be increased by the increase in the consumer price index for all urban wage earners and clerical workers (CPI-W) for the 12 months preceding the prior September 20th.|
|January 1 of each subsequent year||If the Federal minimum wage under the Fair Labor Standards Act is increased such that the increase would exceed the rate under the above schedules, then the New Jersey minimum wage rate shall be raised to match the Federal rate.|
As with previous versions of the Wage and Hour Law (as well as the Fair Labor Standards Act), employers are still required to pay their non-exempt employees time and a half for all hours worked in excess of 40 per week.
The new legislation retains the previous exemptions to New Jersey’s minimum wage and overtime requirements, including most significantly the exemptions for executive, administrative and professional employees.
Full-time students employed by their colleges need only be paid 85 percent of the then current minimum wage rate. New employees may be paid a “training wage” for their first 120 hours of work, the rate of which cannot be less than 90 percent of the minimum wage rate then in effect.
The minimum wage rate for employees of “small employers” (ie., those defined as having less than six employees) are phased in so that they do not reach those paid by employees with six or more employees until January 1, 2028. Piece-rate or farm employees also receive a lesser minimum wage rate.
The amendment also establishes a new class of workers referred to as “Employee[s] with an impairment.” These employees are defined as
an employee earning at least the minimum wage [then] effective… whose work capacity is significantly impaired by age or physical or mental deficiency or injury and who, based on a determination by the State, is found eligible for personal assistance services or prescribed drugs because without such services or drugs the individual would be unable to perform the essential functions of the employment position that the individual holds.
Employers who employ employees with an impairment can receive tax credits.
Employers need to be aware of the amendment’s requirements. They need to update their policies and pay practices accordingly.
Employees should be aware of their new rights under the legislation.