As one of the states to have taken the initiative to set its own minimum wage rates above the federal standard, understanding the nuances of the New Jersey minimum wage structure is vital for small businesses aiming to remain compliant and competitive. Without a comprehensive understanding of the regulations that govern how much you must pay your employees, you risk facing legal consequences, employee dissatisfaction, and a tarnished reputation.
So, what is the minimum wage in New Jersey? Is the minimum wage going up in New Jersey in 2024? What other wage laws do employers in NJ need to be aware of?
In this post, we will explore everything you need to know about New Jersey’s minimum wage laws, shedding light on the state’s unique approach and how it directly impacts small businesses. From recent legislative changes to exemptions and compliance strategies, this guide will provide you with the knowledge you need to navigate the evolving minimum wage regulations in the Garden State.
- US Minimum Wage Structure
- New Jersey Minimum Wage Timeline
- New Jersey Minimum Wage Rate
- Exemptions & Special Cases
- Additional New Jersey Wage Laws
- Compliance Requirements for Employers
- How Factorial Can Help You Comply with New Jersey’s Wage Laws
- What Can You Do with Factorial’s Payroll Management Software?🚀
US Minimum Wage Structure
In the United States, the minimum wage is not a single uniform standard but rather a multi-tiered system that encompasses federal, state, and even municipal levels. This tiered approach can lead to varying minimum wage requirements depending on the jurisdiction in which a worker is employed.
Federal Minimum Wage: The Lowest Tier
Established by the Fair Labor Standards Act (FLSA), the federal minimum wage is the baseline for all workers in the country. Currently, the federal minimum wage stands at $7.25 per hour. However, this standard is considered the lowest tier, as many states and municipalities have enacted their own minimum wage laws that surpass the federal level.
State Minimum Wage: The Mid-Tier
Thirty-one states and the District of Columbia have state minimum wage rates that exceed the federal standard. These state-level requirements serve as the second tier of wage protection, ensuring that workers in these jurisdictions receive a higher minimum wage than the federal baseline.
Municipal Minimum Wage: The Highest Tier
In some cases, municipalities, or smaller city or town governments, may have their own municipal minimum wage rates that are higher than both federal and state standards. These ordinances are often enacted to address specific economic conditions or living costs within a particular city or town. For example, the New Jersey minimum wage is higher than the state rate in Hoboken, Jersey City, East Rutherford, and West New York.
New Jersey Minimum Wage Timeline
New Jersey has a long history of gradually raising its minimum wage to ensure that workers are paid a fair and livable wage.
Here’s a timeline of the New Jersey minimum wage:
- 1968: The federal minimum wage was $1.40 per hour. New Jersey’s minimum wage was slightly higher, at $1.45 per hour.
- 1976: New Jersey’s minimum wage increased to $2.20 per hour.
- 1980: New Jersey’s minimum wage increased to $3.10 per hour, then increased again to $3.35 per hour in 1981, where it remained for a decade.
- 1990s: The New Jersey minimum wage increased to $3.80 per hour, then $5.05 per hour in 1994. This rate was frozen until the year 2000.
- 2000: The state mandated a slight increase to $5.15 per hour.
- 2006: New Jersey passed a law phasing in a $7.25 per hour minimum wage, matching the federal minimum wage. This target rate was eventually achieved in 2010.
- 2014: The NJ state minimum wage increased to $8.25 per hour, then again to $8.38 per hour in 2015.
- 2019: New Jersey passed a law gradually raising the minimum wage to $15 per hour by 2024. As an initial phase of this new law, the NJ minimum wage increased to $10.00 per hour, rising to $11.00 per hour in 2020, $12.00 per hour in 2021, and $13.00 per hour in 2022.
- 2023: The minimum wage increased again to $14.13 per hour – the current state minimum rate.
New Jersey Minimum Wage Rate
As you can see above, the New Jersey minimum wage has been steadily increasing over the years. This is in line with the trend of rising minimum wages across the United States. The goal of raising the minimum wage is to ensure that workers are paid a fair wage that allows them to meet their basic needs and participate in the economy.
So, what is the current New Jersey hourly wage? And is it set to increase again in 2024?
The New Jersey minimum wage reached a new benchmark on January 1, 2023, standing at $14.13 per hour for most employees. The state had originally planned a $1 increase from the previous minimum of $13 per hour, but opted for a $1.13 increase instead, reflecting the state government’s overarching strategy to gradually raise New Jersey’s minimum wage to $15 per hour by 2024.
In addition, certain municipalities in New Jersey have adopted higher minimum wages than the state minimum wage.
These municipalities include:
- Hoboken: $16.50 per hour
- Jersey City: $15.54 per hour
- East Rutherford: $15.45 per hour
- West New York: $15.20 per hour
- South Hackensack: $15.00 per hour
- Newark: $14.69 per hour
- Clifton: $14.40 per hour
- Montclair: $14.35 per hour
As part of a gradual increase mandated by a 2019 bill signed by Gov. Phil Murphy, the New Jersey state minimum wage will increase by a further $1 to $15.13 per hour for most workers on January 1, 2024. There are currently no plans for further increases to the New Jersey minimum wage after 2024 as the upcoming minimum wage of $15.13 per hour is considered sufficient to support a basic standard of living in the state.
Exemptions & Special Cases
New Jersey minimum wage regulations are not always straightforward. For example, there are certain exemptions and special cases that apply to specific types of workers and industries. Employers must be aware of these exemptions and special cases to ensure they are compliant with the New Jersey minimum wage regulations.
Here’s a summary of the key exemptions and special considerations.
Tipped Employees
While the minimum wage for most employees is set to increase to $15.13 per hour in 2024, tipped employees, such as servers and bartenders, will be subject to a lower hourly wage of $5.26 per hour. However, this lower wage only applies if an employee’s tips bring their overall earnings to at least the standard minimum wage. If they don’t, then the employer must make up the difference between the employee’s hourly wage and the standard minimum wage.
Seasonal Employees
Employers with fewer than six employees are exempt from the New Jersey minimum wage requirement. As of 2024, these employers must pay a minimum wage of $13.93 per hour. Additionally, seasonal employers who hire employees for less than 60 days per year, are exempt from the minimum wage requirement.
Student Workers
Under certain conditions, colleges or universities that employ students can pay them at a rate of 85% of the minimum wage.
Outside Salespeople
External salespeople are exempt from the minimum wage requirement if they meet certain criteria.
This includes:
- Being primarily responsible for securing orders or contracts for the sale of goods or services from customers outside the employer’s establishment.
- Engaging in regular and customary travel outside the employer’s premises to meet with customers.
- Earning a total of at least 75% of the applicable minimum wage through commissions, bonuses, and any non-discretionary gratuities.
Certain Service Occupations
Certain service occupations, such as hotel and motel employees, are exempt from the minimum wage requirement if they meet certain criteria.
This includes:
- Being primarily engaged in housekeeping, janitorial, maintenance, or food services.
- Earning a total of at least 60% of the applicable minimum wage through tips and other gratuities.
- Being covered by a collective bargaining agreement that provides for a minimum wage rate that is at least 85% of the applicable state minimum wage.
Religious Exemptions
The New Jersey Department of Labor and Workforce Development (NJDOL) has the authority to waive the minimum wage requirement for religious organizations if they can demonstrate that their religious beliefs are the primary reason for their exemption. The NJDOL will consider the organization’s mission, its financial resources, and its ability to pay the minimum wage.
Additional New Jersey Wage Laws
Aside from the New Jersey minimum wage, there are several additional wage laws that employers in the Garden State need to be aware of.
This includes:
- New Jersey State Wage and Hour Law. According to the New Jersey Wage and Hour Law, (N.J.S.A.), employers must keep accurate records of employee hours worked. This includes start and end times, meal breaks, and overtime hours. Employers must also maintain accurate and complete records of wages paid, deductions, and garnishments. Employers must maintain these records for six years and make them available to the NJDOL upon request. In addition, according to this law, employers cannot make deductions from employees’ wages without their written consent. Finally, according to the N.J.S.A, employers must pay overtime to non-exempt employees who work more than 40 hours per workweek. Employers must calculate overtime pay as 1.5 times the employee’s regular hourly wage.
- New Jersey Equal Pay Law. In line with the federal Equal Pay Act, employers in New Jersey must not discriminate against employees on the basis of sex by paying them unequal wages for substantially equal work. This is known as pay parity.
- New Jersey Paid Sick Leave Law. This law requires employers to provide eligible employees with paid sick leave for certain personal and family reasons. Accepted reasons include an employee’s own illness or that of an employee’s child, spouse, domestic partner, parent, or grandparent.
- New Jersey Unpaid Wage Claims Act. According to this law, employees can file claims for unpaid wages, including minimum wage violations, overtime violations, and wage deductions.
- New Jersey Wage Theft Prevention Act. Finally, this law strengthens the penalties for wage theft offenses and enhances the investigative and enforcement powers of the NJDOL.
Compliance Requirements for Employers
Employers in New Jersey are responsible for complying with all the state wage laws that we have just seen. These laws are designed to ensure that all employees are paid a fair wage for their work and that they are not subjected to wage theft or other unfair labor practices.
Specifically, New Jersey employers must comply with the following requirements.
New Jersey Minimum Wage
Effective January 1, 2024, pay all eligible employees at least the upcoming New Jersey minimum wage of $15.13 per hour. For tipped employees, the minimum hourly wage is $5.26 per hour, but employers must make up the difference if the employee’s tips do not bring their total earnings to at least $15.13 per hour.
Keep in mind that certain exemptions from the minimum wage requirement may apply to specific types of employees. This includes students working for colleges or universities, outside salespeople, and seasonal employees.
Recordkeeping
Maintain accurate and complete records of employee hours worked, wages paid, and other relevant information. This includes overtime hours, deductions, and tip records. Moreover, make sure you keep these records for six years and make them available to the New Jersey Department of Labor and Workforce Development (NJDOL) upon request.
Timekeeping
Accurately record the start and end times of each employee’s workday, including breaks and meal periods. You must also provide employees with access to their time records and ensure they understand how their hours are calculated.
Overtime Pay
Pay overtime to employees who work more than 40 hours in a workweek. The overtime rate is 1.5 times the employee’s regular hourly wage (time and a half). Do not require or pressure employees to work overtime without their written consent. In addition, make sure you calculate overtime wages accurately and pay employees within the required timeframe.
Wage Deductions
Make deductions from employees’ wages only with their written consent, except for authorized deductions, such as taxes and garnishments. Furthermore, make sure you do not retaliate against employees who refuse to consent to deductions.
Wage Notices
Make sure you post a wage notice in a location where all employees can easily see it. This notice should clearly outline the minimum wage, overtime pay requirements, and other relevant wage laws. Finally, update the notice as necessary to reflect any changes in wage laws.
Wage and Hour Complaints
Finally, provide employees with clear and accessible information on how to file a wage and hour complaint with the NJDOL. Moreover, if an employee files a complaint, cooperate fully with NJDOL investigations and provide any requested documentation. Once the investigation has concluded, take prompt corrective action to address any violations identified by the NJDOL.
Additional Compliance Best Practices
- Pay employees for all scheduled work hours, even if the employee is not able to work due to circumstances beyond their control.
- Avoid withholding wages from employees to cover the cost of uniforms, equipment, or mandatory training.
- Pay employees for all time spent working, including waiting time and meal breaks.
- Respect employee meal breaks and avoid interrupting them for non-emergency matters.
- Create a detailed employee handbook outlining all employer wage law obligations. In addition, make sure employees have access to the document at all times.
How Factorial Can Help You Comply with New Jersey’s Wage Laws
Factorial’s payroll software can help you manage your payroll accurately and efficiently, ensuring that you comply with all New Jersey wage laws. The software automatically calculates employee wages, including overtime, garnishments, and deductions, and generates paychecks in a variety of formats. It also tracks and manages payroll taxes, ensuring that you are compliant with all legal requirements.
In addition, Factorial can help you calculate and process holiday pay in accordance with New Jersey law. For example, the state requires that employers pay non-exempt employees time and a half for hours worked on a New Jersey state holiday. Factorial can track which employees are entitled to holiday pay and automatically calculate the amount of pay they should receive at the end of each pay period.
Moreover, Factorial’s electronic time clock can help you comply with time-tracking legal requirements. For instance, the software can track employee hours, breaks, and meal periods, and it can generate reports that can be used to verify compliance.
Finally, Factorial’s employee record management software can help you store and maintain employee records, including payroll information, timesheets, and other relevant documents. This can help you comply with New Jersey’s recordkeeping regulations and ensure that you have all information readily available if the NJDOL conducts an audit of your records.
Ultimately, all these features will help you stay compliant with the New Jersey minimum wage law and all other relevant labor regulations in the state. That way, you can rest assured that your business fosters a positive and productive work environment and contributes to a healthy and thriving business community.
