New Jersey Minimum Wage To Rise to $8.44/HourOctober 4, 2016 – Alerts Labor & Employment Alert
On September 30, 2016, the New Jersey Department of Labor and Workforce Development (NJLWD) announced that the New Jersey minimum wage will be raised from its current rate of $8.38/hour to $8.44/hour, effective January 1, 2017.
On November 5, 2013, New Jersey voters approved an amendment to the state constitution to increase the state’s minimum wage. In addition to increasing the New Jersey minimum wage to $8.25/hour starting January 1, 2014, this amendment also indexed New Jersey’s minimum wage rate to the consumer price index for urban wage earners and clerical workers (CPI-W). The increase scheduled to take effect this January was announced pursuant to this law.
By way of further background, the CPI-W is a tool the federal government uses to measure the cost of living, which it then uses to calculate increases in Social Security general benefits. Its precise calculation is complex and involves a variety of data points. Technical explanations aside, the bottom line is that the New Jersey minimum wage has the potential to increase every calendar year based on the cost of living.
Employers may already be familiar with this process in practice, as the New Jersey minimum wage was raised to its current $8.38/hour on January 1, 2015. And while 2016 saw no increase to the New Jersey minimum wage because there was no corresponding increase in the cost of living, 2017 will require an increase to $8.44/hour.
Takeaways for Employers
With the knowledge that New Jersey’s minimum wage will rise to $8.44/hour on January 1, 2017, how should employers respond?
- First, start planning now. January 1, 2017 is less than 90 days from today. For some employers, that may be fewer than six bi-weekly pay periods from now. You won’t want to put off ensuring that your payroll process reflects the required change, given the potential liability for noncompliance.
- Second, ensure compliance to avoid stiff penalties. New Jersey’s minimum wage laws permit employees paid less than the minimum wage to sue to recover the difference between wages actually paid and the required wage. In addition, employees who bring suits are entitled to costs and attorney’s fees—expenses that can add up quickly. Moreover, employees are allowed to bring lawsuits on behalf of themselves and similarly situated employees, i.e., on a class action basis. Finally, failure to pay the minimum wage may subject the employer to investigation, oversight and legal action by NJLWD.
- Third, don’t forget about overtime. Remember, New Jersey law requires nonexempt employees to be paid at a rate of at least 1.5 the employee’s regular rate for all hours worked over 40 in a week. This means an employee who earns the minimum wage must be paid at least $12.66/hour for each hour over 40 worked per work week.
For these reasons, employers are encouraged to consult knowledgeable employment counsel with experience in New Jersey wage and hour matters to ensure timely compliance and minimize litigation risk.
For more information about this alert or questions about how to implement and comply with New Jersey’s new minimum wage, please contact Brian McGinnis at 215.299.2042 or [email protected] or any member of the firm’s Labor and Employment Department.