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New Jersey Governor Phil Murphy recently signed into law a bill that will incrementally increase the minimum wage for most New Jersey employees until it reaches $15.00 per hour. The law reflects a trend observed in other states, such as New York, to raise the hourly minimum wage to $15.00.

The minimum wage for most New Jersey employees will incrementally increase from $8.85 per hour to $15.00 per hour by 2024, as follows: $10.00 per hour on July 1, 2019; $11.00 per hour on January 1, 2020; $12.00 per hour on January 1, 2021; $13.00 per hour on January 1, 2022; $14.00 per hour on January 1, 2023; and $15.00 per hour on January 1, 2024.

These minimum wage increases will also impact businesses that employ tipped workers who receive a lesser minimum “cash wage” by incrementally increasing the minimum cash wage from $2.13 to $5.13 by 2024. Employers must ensure that tipped workers receive sufficient tips to bring their total hourly compensation to at least the applicable minimum wage.

However, not all employees who are paid the minimum wage will see their wages increase to $15.00 per hour by 2024. For example, the minimum wage for employees of small employers (i.e., fewer than six employees), and employees who are engaged in “seasonal employment”, will not increase to $15.00 per hour until 2026. Additionally, the minimum wage for farm workers will incrementally increase to $12.50 an hour by 2024, at which time a special committee will decide whether to continue with the incremental increase to $15.00 per hour.

Employers are reminded that any incremental increase in the minimum wage will also correspondingly increase the applicable overtime rate for covered employees. For instance, an employee who is entitled to a minimum wage of $15.00 per hour may also be entitled to overtime pay at the rate of $22.50 per hour for each hour worked over 40 hours in a given workweek.

Accordingly, New Jersey employers may need to update their minimum wage rates and payroll practices to ensure compliance with this new law. As always, employers are encouraged to consult with their employment counsel to help analyze any issues and determine best practices for compliance.

For more information on the topic discussed, contact:

• Joel A. Klarreich  |  jak@thsh.com  |  212-508-6747
• Jason B. Klimpl  |  klimpl@thsh.com  |  212-508-7529
• Elizabeth E. Schlissel  |  schlissel@thsh.com  |  212-508-6714
• Andrew W. Singer  |  singer@thsh.com  |  212-508-6723
• Stacey A. Usiak  |  usiak@thsh.com  |  212-702-3158
• Andrew P. Yacyshyn  |  yacyshyn@thsh.com  |  212-508-6792