February 11, 2019
Governor Phil Murphy signed
A-15/S-15
on February 4, 2019 increasing the minimum wage in New Jersey to $15 per hour in 2024. The law requires employers to increase hourly wages in increments. As of July 1, 2019, workers must be paid $10 per hour. On January 1, 2020 and each year afterward, wages are increase by $1 per year until reaching $15 in 2024. The minimum wage in New Jersey is currently $8.85 per hour.
There are some exceptions. Workers for small businesses and seasonal employees will see their minimum wage reach $15 an hour in 2026. Tipped workers (earning $30 in tips monthly), who currently have a minimum hourly wage of $2.13, will see it climb to $5.13 an hour by 2024.
Farm workers' wages will climb to $12.50 over five years.
“Small employer” is defined as any employer who employed less than six employees for every working day during each of the majority of the calendar workweeks in the current calendar year and less than six employees for every working day during not less than 48 calendar workweeks in the preceding calendar year (exceptions apply to new businesses).
New Jersey joins California, Massachusetts, New York and Washington, D.C., in elevating the rate to the highest
minimum wage
offered in the nation.
New Jersey already has the highest taxes and worst business climate in the country. According to the
2019 State Business Tax Climate Index
published by the
Tax Foundation
, overall, the Garden State ranked number 50. By category, New Jersey ranked: 47 for its corporate tax rank, 50 for its individual income tax rank, 45 for its sales tax rank, and 48 for its property tax rank. The only category that New Jersey ranked well is unemployment insurance at number 32.
By comparison, the current federal minimum wage is $7.25 per hour. Is has not increased since July 2009. The minimum wage in Pennsylvania is also $7.25. Some states, cities, and counties have a higher minimum wage rate. When the state, city or county minimum wage rate is higher than the federal rate, employers are required to pay workers the higher amount.
The minimum wage rate increased to $10.35 for employees performing work on or in connection with covered federal contracts on January 1, 2018.
Some employees who are not protected by the
Fair Labor Standards Act
are exempt from the minimum wage requirements. This includes
tipped employees
who generally must be paid a total minimum cash wage of $7.25 per hour. This can be a combination of cash tips (tip credit) and direct (or cash) wages. Employers that elect to use the tip credit provision must make up the difference if an employee's tips combined with the employer's direct wages of at least $2.13 per hour do not equal the minimum hourly wage of $7.25 per hour.
Martin C. McCarthy, CPA, CCIFP
Managing Partner
McCarthy & Company, PC
Disclaimer:
This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).
