New Jersey Minimum Wage Increases: Everything You Need to Know

What are the new minimum wage changes that just took place, or what is the minimum wage?

As of January 1, 2018, minimum wage is $8.60 per hour; however, there are a number of exceptions to this:

  • College students may be paid 85 percent of the minimum wage by their college or university.
  • Tipped employees must be paid a minimum cash wage of $2.13 per hour (based on a maximum tip credit of $6.47 in tips per hour).
  • Employees of nonprofit or religious summer camps and retreats are exempt from the minimum wage between June and September.
  • Minors (ages 18 and under) in certain occupations may be entirely exempt.

Unlike some other states, seasonal and agricultural workers are not exempt from the minimum wage in New Jersey.

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Are there plans to change the minimum wage?

New Jersey’s state minimum wage is reevaluated each year and is based on the values of the Consumer Price Index (CPI), which is intended to raise the rate along with inflation.

In June of 2016, the New Jersey Senate passed a bill that would gradually increase the state’s minimum wage to $15 per hour by 2021. That bill was later vetoed by then-Governor Chris Christie, who posited that the rate hike would ultimately have a negative impact on laborers.

The state minimum wage debate was reopened in the fall of 2017, when Governor Phil Murphy ran on a campaign to increase the state minimum wage to $15 per hour, arguing that the increase is one of the state’s highest priorities.

What’s happening in 2018?

In January 2018, the state’s minimum wage increased from $8.44 to $8.60 per hour. The state continues to debate the $15 minimum wage.

What’s happening beyond 2018?

While details surrounding an increase have not been confirmed, Governor Phil Murphy has communicated an intention to gradually raise the minimum wage to $15 per hour over a few years.

How should small business owners prepare for changes that are being made?

Every business is different, so there isn’t one right way to prepare. Here are a few options you may want to consider:

  • Audit your expenses: Check your cash flow in detail and create a hiring plan that you can afford. In some cases, you may find that hiring temporary workers as needed is less expensive than taking on full-time regular staff.
  • Make sure you hire and keep the right employees: Replacing an employee costs a lot. You decrease the total cost associated with recruiting and training when you hire (and then retain) the right people. Look for candidates who have good track records, come recommended, and fit in with the company culture. Once they’re onboarded, make sure you build a relationship and provide paths for growth; it makes it more likely that they will stay in their role.
  • Increase prices: This is a great way to increase cash flow. Customers are rarely happy with a price hike, but keep in mind that your competitors will be forced to do the same. Just make sure you keep track of trends and don’t raise prices too high.
  • Update tech: Consider automating certain aspects of the work (like payroll), and find ways to reduce production costs.

As always, to make sure your business is prepared and stays in compliance, we recommend that you discuss these upcoming changes to the New Jersey minimum wage laws with your accountant and lawyer.