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New Jersey Raises Minimum Wage: What it Means for Business Owners

by Makenzie RizzoJuly 22, 2019 8:00 AM

The first wave of minimum wage increases hit New Jersey employers July 1 after state legislators reached the deal earlier in the year. However, business owners need to prepare themselves for more than just this initial wage boost. Here’s what New Jersey employers need to know about New Jersey’s plan to raise the minimum wage to $15 – and why business owners across the country should pay attention.

A small business owner accounting for increasing minimum wage. 

Breaking Down New Jersey’s New Minimum Wage Deal

As of July 1, 2019, the minimum wage in New Jersey is now $10 per hour, but it won’t stay there. The new minimum wage deal instituted regular intervals for wage increases. The current $10 rate is set to increase to $11 starting Jan. 1, 2020. From there, it will go up by $1 every subsequent Jan. 1 until capping out at $15 in 2024. 

That’s not necessarily the end of any potential minimum wage increases, however. After 2024, any additional increases are “tied to the consumer price index for all urban wage earners and clerical workers, or CPI-W,” per NorthJersey.com. These changes would go into effect Jan. 1 of every year after 2024. 

Of course, there’s more to the new deal than just one set of minimum wage rollouts. There are some exceptions where certain types of workers will follow an alternative rollout. These include the following groups:

Seasonal workers or employees with five or fewer workers

The minimum wage rate is drawn out for these groups compared to the normal rollout. These types of employees are still currently at $8.85 per hour and follow a modified timeline.

  • $10.30 – Jan. 1, 2020
  • $11.10 – Jan. 1, 2021
  • $11.90 – Jan. 1, 2022
  • $12.70 – Jan. 1, 2023
  • $13.50 – Jan. 1, 2024
  • $14.30 – Jan. 1, 2025 
  • $15 – Jan. 1, 2026
  • CPI-W-based increases plus parity to make up any remaining difference between standard minimum wage

Tipped workers

The take-home pay for these workers follows the same structure as the normal minimum wage rollout, although the how they’re paid is different. Tipped employees must receive at least minimum wage through the combination of salary and tips. The new rollout updates the salary floor for these workers accordingly: 

  • $2.63 – July 1, 2019
  • $3.13 – Jan. 1, 2020
  • $4.13 – Jan. 1, 2021
  • $5.13 – Jan. 1, 2022
  • CPI-W-based increases starting 2025

Agricultural workers

Unlike other groups, agricultural workers will cap out at $12.50 before being tied to CPI-W. Like seasonal employees, these workers are still at $8.85 and follow an adjusted timeline

  • $10.30 – Jan. 1, 2020
  • $10.90 – Jan. 1, 2022
  • $11.70 – Jan. 1, 2023
  • $12.50 – Jan. 1, 2024
  • Any further changes depend on future wage raises  

How Employees Can Prepare for Minimum Wage Increases

When it comes to minimum wage, there’s not much you can do as a business owner except prepare your business for the future. The first step for this is to convert your payroll every time minimum wage increases. If you don’t, the state of New Jersey can dole out fines of up to $1,000 and an “administrative fee equal to not less than 10 percent or more than 25 percent of any payment due to employees.”

You’ll also need to evaluate how the slate of minimum wage increases affect your employees and what it will do to your profitability. This can mean planning out price adjustments for products and services over the next several years to account for the set wage increases. Meanwhile, you can potentially use the new rates to find better employees if you have the financial wiggle room to do so. Offering a little more than minimum wage may make your business more attractive and give you more interested candidates. From there, you can choose the best employees if you struggle to find good talent.

Prepare for the Future with Proper HR Management

The new minimum wage deal is a big change for business owners in New Jersey. However, employers outside of the state should also take notice. New Jersey, along with California and New York, serve as a sort of testing ground for changes like this. If the minimum wage increases do well in New Jersey, other states may look to adopt similar increases as well.

Whether you own a business in New Jersey or some other state, it’s important to make sure you keep up with current and future legislature. As a Professional Employer Organization, GMS not only helps you stay compliant, we can save you time and stress by managing key business functions like payroll, benefits administration, and other important services.

Ready to prepare your business for the future? Contact our New Jersey office or one of our many other locations today to talk to one of our experts about how we can help you make your business simpler, safer, and stronger.

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