Business owners in the Garden State need to be aware that the minimum wage for many jobs will be increasing starting on January 1st. Most NJ workers getting paid minimum wage will see a full dollar increase in their hourly pay.
This isn’t exactly breaking news, as this increase was signed into law by Gov. Murphy back in February of 2019, but it’s understandable if this increase has been forgotten. It’s been a busy couple of years for everyone, and simply staying afloat fiscally has been the priority of many.
With that in mind, this new increase has the potential to help some, hurt others, and add yet another thing for business owners to deal with as they jump from 2021 to 2022.
In this article, I will explain which occupations and positions are included, excluded, and the future of this wage increase that will affect many employers and employees alike.
How Will NJ Minimum Wage Laws Change on Jan. 1st?
The short answer is that most minimum-wage employees can be paid no less than $13.00. For seasonal workers or businesses employing five or fewer workers, the new rate is $11.90. For agricultural workers, the new rate is $10.90. For tipped employees, the new rate is $5.13.
The State has provided an easily digestible table that gives an overview of the wage increases. It is a very helpful place to start if you’re looking to understand what’s happening in 2022, what the past increases have been, and what’s coming next year.
In short, where we’ve been, where we are, and where we’re going in terms of wage laws.
General Overview of Murphy’s Wage Increase
When Gov. Murphy took office in 2018, the NJ state minimum wage was $8.85. One of his first priorities was to push legislators to set a course for a minimum wage increase that would eventually reach 15 dollars an hour.
$8.85 to $15.00 is a rather large jump, so it wasn’t all intended to happen at once. Also, the Murphy-supported legislation made a distinction between different types of employers, recognizing that it would be a greater challenge for some businesses to deliver the same wage increases.
Gov. Murphy’s push was during the height of the Fight For 15 labor organizing seen in many cities and states across the country. Make no mistake; they haven’t disappeared. As COVID fades from the public’s concerns, I assure you that this organization’s voice will be amplified as the pandemic highlighted the nation’s need for “essential workers,” many of whom had been receiving far less than $15 an hour for years.
Who Are “Most Workers?”
This is the largest group of workers affected by the wage increase. Rather than any defining characteristics about this group, this group is defined by a lack of any qualifying features. If an employee is not seasonal, has more than four co-workers, doesn’t receive tips as a majority of their compensation, and isn’t an agricultural worker, an individual falls under this category.
Who Are “Seasonal Workers” and “Seasonal Employers?”
If the position has a defined period of employment determined by a season or holiday, like badge-checkers at the beach or UPS employees hired for the overflow during December, the individual is a seasonal worker.
The actual bill defines this specifically as
- “An individual who is not employed by that employer outside of the period of that year commencing on May 1 and ending September 30”
- A business for which “not less than two-thirds of the employer’s gross receipts were received in a continuous period of not more than sixteen weeks or for which not less than 75 percent of the wages paid by the employer during the immediately preceding year were paid for work performed during a single calendar quarter.
Again, in more digestible terms, summer and holiday employees. Yes, there are certainly businesses that can fall outside of these broad terms, but it’s simplest to evaluate
Who Are “Small Employers?”
Any employer that has no more than five employees. Yes, it’s that simple.
Who Are “Agricultural Workers?”
Any worker employed by a farm to aid in the process of growing crops and/or tending to livestock as a means to produce food products. While some agricultural workers are seasonal workers, they fall into the agricultural category if their work is focused on producing food.
Keep in mind, mechanics hired to maintain machinery or other tradespeople involved in the upkeep of a farm are highly unlikely to be considered agricultural workers. Check with your accounting professionals if you find yourself asking this question.
That said, it’s highly unlikely that anyone in these types of trades would be working for anything even close to minimum wage, so it’s probably not a topic that anyone needs to worry about.
Who Are “Tipped Workers?”
Those who work in foodservice, bars, and whose labor can reasonably be expected to earn them tips. Keep in mind, if a worker fails to earn enough tips during a given shift or pay period, employers must make up the difference to ensure they earned the new minimum wage.
What Happens After The Minimum Wage is $15?
Once the minimum wage reaches $15 per hour, the state Constitution specifies that it will continue to increase annually based on any increase in the Consumer Price Index.
The New Jersey Department of Labor and Workforce Development (NJDOL) sets the minimum wage for the coming year using either the rate specified in the law or a calculation based on the Consumer Price Index (CPI), whichever is higher.
Thus far, the wages set by the law have been higher than those that would be determined by the CPI, but after all the aforementioned categories have reached $15 an hour, increases to the minimum wage will be determined by the CPI.
That, however, is a discussion for years down the road, and plenty can happen politically or legislatively between then and now that could make this information moot.
Wages Up, And I’m Out!
This is definitely something you should discuss with your payroll company, whether it be Sharp or another payroll service. While the increased labor costs are undoubtedly going to cut into overall revenue, the cost of running afoul of the new minimum wage laws is far more costly. It’s best to dot your I’s and cross your T’s on this one and just make sure everything is above board in terms of your payroll. Reach out to us if you have any questions; we’re here and happy to help!