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Minimum Wage: New Jersey

Minimum Wage requirements for other states

Federal law and guidance on this subject should be reviewed together with this section.

Author: John Sarno, Employers Association of New Jersey

Summary

  • Employees in New Jersey must be paid a minimum hourly rate established by the Fair Labor Standards Act (FLSA) or at the rate provided by New Jersey law, whichever is greater. See Minimum Wage.
  • Employers are entitled to a tip credit for the gratuities or tips received by employees. See Tip Credit.
  • Deductions from wages may be made only for specific reasons and agreements. To deduct wages for other purposes is typically unenforceable. See Deductions.

Minimum Wage

Employers in New Jersey must pay nonexempt employees a minimum wage. There are separate wage rates for three different types of employers:

  • Large Employers, meaning any individual, partnership, association or corporation, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee that is not a Small Employer or a Seasonal Employer.
  • Small Employers, meaning any employer that:
    • Was established before the preceding calendar year and employed fewer than six employees for every working day during a majority of the calendar workweeks in the current calendar year and during at least 48 calendar workweeks during the preceding calendar year; or
    • Was newly established during the preceding calendar year and employed fewer than six employees for every working day during all of the weeks of that preceding year, and during a majority of the calendar workweeks in the current calendar year; or
    • Was newly established during the current calendar year and employed fewer than six employees for every working day during a majority of the calendar workweeks in the current calendar year.
  • Seasonal Employers, meaning any employer that:
    • Received at least two-thirds of its gross receipts in a continuous period of no more than 16 weeks during the previous calendar year; and
    • Does not employ employees outside the period between May 1 and September 30.

The minimum wage will increase according to the following schedule:

Effective Date Large Employers Small Employers and Seasonal Employers

1 On January 1, 2020, and January 1 of every subsequent year, the minimum wage will be increased by any increase in the federal Consumer Price Index for Urban Wage Earners and Clerical Workers for the 12 months prior to the preceding September 30. However, the scheduled rate increases apply if they exceed the inflation-adjusted rate. If the federal minimum wage set by the Fair Labor Standards Act is raised to a level higher than the New Jersey minimum wage, then the New Jersey minimum wage rate will be increased to the level of the federal minimum wage and subsequent increases based on increases in the CPI-W will be applied to the higher minimum wage rate.

2On January 1, 2027, and again on January 1, 2028, the minimum wage for Small Employers and Seasonal Employers will be increased by the same amount as the inflation adjustment for Large Employers plus one-half of the difference between $15.00 per hour and the minimum wage in effect in 2026 for Large Employers. As a result, by 2028, the minimum wage for Small Employers and Seasonal Employers will be the same as the minimum wage for Large Employers.

Current $10.00 $8.85
January 1, 2020 $11.00 $10.30
January 1, 2021 $12.00 $11.10
January 1, 2022 $13.00 $11.90
January 1, 2023 $14.00 $12.70
January 1, 2024 $15.00 $13.50
January 1, 2025 Adjusted for inflation1 $14.30
January 1, 2026 Adjusted for inflation1 $15.00
January 1, 2027 Adjusted for inflation1 Adjusted for inflation2
January 1, 2028 Adjusted for inflation2

Employees engaged on a piece-rate or regular hourly rate basis to labor on a farm are subject to separate minimum wage rates.

+N.J. Stat. § 34:11-56a1 and +N.J. Stat. § 34:11-56a4, as amended by +2018 Bill Text NJ A.B. 15.

Subminimum Wages

Certain employees may be paid subminimum wages.

Trainees

Effective January 1, 2020, employers may pay employees enrolled in an established employer on-the-job or other training program that meets standards set by regulations adopted by the New Jersey Department of Labor and Workforce Development a training wage of 90 percent of the applicable minimum wage rate for the first 120 hours of work after hiring the employee in an occupation in which the employee has no previous similar or related experience. An employer may not use trainees to displace current employees. An employer that pays an employee a training wage must make a good-faith effort to continue to employ the employee after the 120-day training period expires and must not hire the employee at the training wage unless there is a reasonable expectation that there will be regular employment. Repeated, knowing violations of these requirements may result in the Department suspending an employer's right to pay a training wage. +N.J. Stat. § 34:11-56a4(4)(g), as enacted by +2018 Bill Text NJ A.B. 15.

Full-Time Students

Full-time students employed by a college or university at which they are enrolled may be paid 85 percent of the minimum wage. +N.J. Stat. § 34:11-56a4.

Individuals With Disabilities

A charitable or nonprofit organization may pay an individual with a disability less than the minimum wage within a recognized program of rehabilitation for individuals whose earning capacity is impaired by age, physical or mental deficiency or injury, and to provide such individuals with remunerative employment or other occupational rehabilitating activity of an educational or therapeutic nature. +N.J. Stat. § 34:11-56a17.

Tip Credit

Employers are entitled to a credit of $6.72 for the gratuities or tips received by employees who customarily and regularly receive gratuities or tips. This credit may be applied against the hourly wage rate that would otherwise be paid to the employee under +N.J. Stat. § 34:11-56a4(a).

+N.J. Stat. § 34:11-56a1 and +N.J. Stat. § 34:11-56a4, as amended by +2018 Bill Text NJ A.B. 15.

Section 5(c) of the 2019 amendments establishing this tip credit provision, +2018 Bill Text NJ A.B. 15, appears to be ambiguous with respect to whether an exception from the lower minimum wage rate for employees who customarily and regularly receive gratuities or tips applies only to employees of Seasonal Employers or to both employees of Seasonal Employers and employees of Small Employers.

A summary of the amendments prepared by the New Jersey Assembly's Appropriations Committee states there are exceptions "for seasonal employees other than tipped employees," but makes no mention of Small Employees. This suggests that Small Employers may claim a tip credit against the lower minimum wage rate for Small Employers and thus pay a lower minimum direct cash wage, but Seasonal Employers may not.

However, according to an email to XpertHR from the legal staff of the New Jersey Department of Labor and Workforce Development (NJDOL), the exception for tipped employees contained within Section 5(c) of +2018 Bill Text NJ A.B. 15 applies to employees of both Seasonal Employers and Small Employers. In other words, whether a Small Employer or a Seasonal Employer may pay to employees who customarily receive gratuities or tips the lower minimum wage provided in Section 5(c) does, in fact, depend on whether the employer does or does not claim a tip credit under Section 5(e). The NJDOL offered the following example:

Practical Example

A Small Employer of tipped employees (a coffee shop with two employees, both tipped) that decides not to claim the Section 5(e) tip credit would be entitled to pay its employees the lower minimum wage set forth within Section 5(c); whereas, if the same Small Employer were to claim the Section 5(e) tip credit for each of its two employees, both tipped, that tip credit would be applied against the higher Section 5(a) minimum wage.

Based on the NJDOL's interpretation of +2018 Bill Text NJ A.B. 15, the maximum tip credit and the minimum cash wage would be as follows:

Effective Date Maximum Tip Credit Minimum Cash Wage for All Employers,
Whether Large, Small or Seasonal
Current $7.37 $2.63
January 1, 2020 $7.87 $3.13
January 1, 2021 $7.87 $4.13
January 1, 2022 $7.87 $5.13
January 1, 2023 $8.87 $5.13
January 1, 2024 $9.87 $5.13
January 1, 2025 $9.87 $5.13 + inflation adjustment

New Jersey courts give "great deference" to an agency's interpretation of statutes within its scope of authority and its adoption of rules implementing the laws for which it is responsible. See, e.g., Hargrove v. Sleepy's, LLC, +220 N.J. 289, 302 (N.J. Jan. 14, 2015). The NJDOL's email to XpertHR does not represent an official interpretation or rule, but the agency may provide one at a later date. In the meantime, a Small Employer or Seasonal Employer can minimize its legal exposure by claiming a tip credit only against the higher minimum wage for Large Employers.

In determining the cash gratuities actually received by an employee, the following methods will have evidentiary value:

+N.J.A.C. § 12:56-8.3.

Coverage/Definitions

A gratuity means cash received by an employee for services rendered for an employer or customer of an employer. +N.J.A.C. 12:56-8.1.

Employee Property

Gratuities are the property of the tipped employee and must be restored to the tipped employee, except when gratuities are pooled. +N.J.A.C. § 12:56-8.4.

Tip Pools

Gratuities may be pooled voluntarily by the employees or as a policy of management.

If employees practice gratuity splitting (for example, food servers pay a portion of gratuities received by them to food clearers), only the employee's applicable, proportionate share is included in wages.

As long as employees agree to it in advance, an employer may establish an average value of gratuities received by an employee based on a percentage of gross sales apportioned on the basis of the hours worked among the employees being tipped. This portion will be:

  • Derived from a representative sampling of the evidentiary sources listed above; or
  • 10 percent; or
  • Some other agreed-upon method, subject to the approval of the New Jersey Department of Labor and Workforce Development.

+N.J.A.C. § 12:56-8.2, +N.J.A.C. § 12:56-8.4.

Recordkeeping

An employer must keep certain records for employees who receive gratuities.

Meals and Lodging

In New Jersey, the "fair value of any food or lodgings supplied by an employer to an employee" is considered wages. +N.J. Stat. § 34:11-56a1.

However, the costs of meals and lodging that the employer requires the employee to accept (for example, when an employee is required to live on site) cannot be considered applicable as minimum wages. +N.J.A.C. § 12:56-13.8.

Deductions

It is typical to make certain deductions from an employee's wages. Questions often arise as to the type of deductions that may be made legally. Sometimes, even defining what constitutes "wages" can be difficult. The term "wages" under New Jersey wage and hour laws means monies due an employee from an employer for services rendered as a result of their employment, including commissions, bonus and piecework compensation, any gratuities received by an employee for services rendered to an employer or a customer of an employer, and the fair value of any food or lodgings supplied by an employer to an employee. +N.J. Stat. § 34:11-56a1.

For purposes of determining compliance with New Jersey's statutory minimum wage, an individual's hourly wage is determined by dividing an individual's gross pay by his or her hours worked, not by dividing his or her net pay by hours worked. In other words, legal deductions from an individual's pay are not used to reduce the numerator (wages) in the hourly wage calculation.

In New Jersey, only the following deductions may be made from wages:

  1. Sums that an employer is to withhold or divert under state or federal law (such as taxes, union dues and initiation fees, garnishments);
  2. Contributions authorized either in writing by employees or under a collective bargaining agreement to: employee welfare plans, insurance plans, retirement and profit-sharing plans, plans establishing individual or group retirement annuities as defined by +26 U.S.C. § 408(b), or individual retirement accounts at any state or federally chartered bank, savings bank, or savings and loan association, as defined by +26 U.S.C. § 408(a);
  3. Payments authorized by employees for employer-sponsored programs for the purchase of insurance or annuities on a group or individual basis;
  4. Contributions authorized either in writing by employees or under a collective bargaining agreement for payment into company-operated thrift plans or into security-option or security-purchase plans to buy securities of any corporation at or below market price, provided such securities are listed on a stock exchange or are marketable over the counter;
  5. Payments authorized by employees into personal savings accounts, such as to savings fund societies, savings and loan associations, credit unions; payments to banks for Christmas and vacation funds; payments for the purchase of US Government bonds - provided all such deductions are approved by the employer;
  6. Contributions authorized by employees for organized and generally recognized charities, if the deductions are approved by the employer;
  7. Deductions to rectify payroll errors;
  8. Repayment of employer loans to employees, and payment for company products, made in accordance with a periodic payment schedule contained in the loan purchase agreement;
  9. Recoupment of pay advances and advances of expense money;
  10. Payments authorized by employees or their collective bargaining agent for the rental, laundering or dry-cleaning of work clothing or uniforms;
  11. Payments for safety equipment, provided all such deductions are approved by the employer;
  12. Payments authorized by employees or their collective bargaining agent for health club membership fees or for child care services, provided such deductions are approved by the employer;
  13. Payments for mass transportation commuter tickets, if authorized by the employee in writing or in a collective bargaining agreement;
  14. Contributions (to a maximum of $5 per week) to certain political action committees organized to aid or oppose candidates for state or local office, or public questions, if authorized by the employee in a writing that includes the statement that his or her contribution is voluntary and in compliance with state law and if deductions are made for only one committee at a time; and
  15. Installment payments to satisfy financial obligations of an employee to the State of New Jersey in amounts expressly authorized by the employee, and pursuant to a system instituted by the employer.

+N.J.A.C. 12:55-2.1.

Wage Deduction Agreements

In some states, the use of wage deduction agreements is common. However, in New Jersey, if the wage deduction falls outside the specific categories referenced above such agreements are not enforceable in New Jersey.

For example, agreements to deduct tuition payments made by an employer on behalf of an employee (unless evidenced by a loan agreement) are not enforceable.

Nor is an agreement to deduct the costs of replacing an ID badge, with the exception of airport security personnel, provided it is in accordance with a fee schedule approved by the federal Transportation Security Administration and such deduction is approved by the employer.

Communications in Postings Required by New Jersey Law

New Jersey requires a poster relating to the minimum wage and other requirements. +N.J. Stat. § 34:11-56a21.

Future Developments

There are no developments to report at this time. Continue to check XpertHR regularly for the latest information on this and other topics.