Recently enacted Assembly Bill 15 will increase the state minimum wage incrementally to $15 per hour by 2024, starting with an increase from the current $8.85 to $10 effective July 1, 2019. (Governor's press release.)

After the increase to $10 per hour effective July 1, 2019, the state minimum wage will increase to $11 per hour on January 1, 2020, and then will increase by $1 per hour every January 1st until it reaches $15 per hour on January 1, 2024.?After 2024, the minimum wage will increase based on inflation.

Seasonal workers and employees of small businesses with fewer than six employees will see a delay in the increase, reaching $15 per hour by January 1, 2026. By January 1, 2028, employees in these groups will receive the minimum wage inclusive of inflation adjustments that take place from 2024 to 2028.

The legislation establishes a training wage, allowing employers for 120 days after hire to pay 90% of the minimum wage in effect to individuals enrolled in an established employer on-the-job training program. The program must meet conditions provided for by regulations to be adopted by the New Jersey Department of Labor and Workforce Development.

Employers of employees who customarily and regularly receive tips or gratuities are entitled to a tip credit of $6.72 through June 30, 2019; $7.37 effective July 1, 2019; $7.87 during calendar years 2020–2022; $8.87 effective January 1, 2023; and $9.87 effective January 1, 2024 and thereafter. For example, employers may pay tipped employees a minimum wage of $2.63 per hour, plus tips, effective July 1, 2019. Total hourly wages plus tips must equal at least the minimum wage per hour in effect.

For agricultural workers, the base minimum wage will increase to $12.50 per hour by January 1, 2024. No later than March 31, 2024, the New Jersey Labor Commissioner and Secretary of Agriculture will jointly decide whether to recommend that the minimum wage for agricultural workers increase to $15 per hour by January 1, 2027.

The legislation also establishes a tax credit for employers that hire workers with disabilities.

Ernst & Young LLP insights

New Jersey joins several other states in establishing a $15 per hour minimum wage. For more information on the minimum wage in effect for other states, see EY Payroll Newsflash 2019-0086.

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EY Payroll News Flash