Q: I have employees who work in New Jersey.  What do I need to know about the minimum wage increase?

A: New Jersey recently passed a law that will raise the minimum wage by increments over the next five years.  The minimum wage, which currently is $8.85 per hour, will increase to $10.00 per hour on July 1, 2019.  It will rise to $11.00 per hour on January 1, 2020, and will increase by one dollar each subsequent year until January 1, 2024, when it will land at $15.00.  Future minimum wage increases after 2024 will be tied to inflation.

In enacting this law, New Jersey joins California, New York, Massachusetts and the District of Columbia on the list of states that have enacted legislation to implement a $15 minimum wage. Including New Jersey, nineteen states have or will increase their minimum wage in 2019.  A bill recently introduced in the House of Representatives would raise the national minimum wage to $15, far higher than the current federal hourly rate of $7.25.

While there are no exemptions for teen workers, under the New Jersey law, employees of small employers (defined as those companies who employ five or fewer employees) and seasonal employees are subject to a different minimum wage increase schedule. For these employees, the current minimum wage will increase to $10.30 on January 1, 2020, and then by $0.80 on January 1 of each subsequent year, up to $15.00 per hour on January 1, 2026.

Seasonal employment is defined as employment by an employer: (1) who exclusively provides services in a continuous period of not more than 10 weeks during June, July, August, or September; (2) for whom 2/3 or more of the employer’s gross receipts for the immediately preceding calendar year were received in a continuous period of less than 16 weeks; or (3) for which at least 75% of the wages paid by the employer during the immediately preceding year were paid for work performed during a single calendar quarter. Seasonal employment also includes employment by a non-profit or government entity during the period of May 1 to September 30 (so long as the employee is not employed by the employer outside of the period).

To prepare for the law, employers should ensure their annual budgets account for the increases, and that payroll personnel are prepared to implement them.