With the New Year approaching, employers in New Jersey can prepare themselves for impending changes to the minimum wage requirements of the state. In 2019, Governor Phil Murphy had signed a law for gradually increasing the minimum wage to $15 per hour for a maximum of non-exempt employees. Since the enactment of the law, the minimum wage of the state has increased by around $1 for most employers every year on January 1st.
Effective 1st January, 2022, the following increases in the state’s minimum wage will be in practice:
- Most employers –an increase from $12 to $13 every hour
- Small and seasonal employers (less than 6 employees) –an increase from $11.10 to $11.90 every hour
- Employees in the agricultural industry –an increase from $10.44 to $10.90 every hour or 70 cents below the value of standard minimum wage
- Tipped employees –an increase from $4.13 to $5.13 every hour. The total minimum wage that a tipped employee should earn must be equal to or more than $13 every hour –including tips. This is as per the new regulations for tipped employees.
- Long-term care staff –an increase from $15 to $16 every hour
- Employees that are below the age of 18 years or even younger in specific occupations, including in-home childcare, might be totally exempt
- College or high-school students will be paid $9.35 every hour or 85 percent of the total minimum wage for doing part-time work –for around 20 hours every week.
Minimum Wage Rising in New Jersey – What is the Truth?
As specified, the minimum wage in New Jersey was raised in 2019. It made the Garden state the 3rd largest state to increase the minimum wage gradually to around $15 per hour. The minimum wage in New Jersey will be increased $1 every year until the year 2024.
It is required to ensure overtime work for employees that are non-salaried in New Jersey, for which employees must be paid time and a half. However, employers are under no obligation to pay overtime for holidays and weekends.
Increase in Minimum Wages Beyond 2022 –Will It Happen?
The minimum wage increase in New Jersey in 2022 is set at $13 every hour for a majority of employees, effective 1st January 2022. It is set to increase to $14 in 2023 and $15 by 1st January 2024.
Tips for Small Business Owners to Prepare for the Changes
- Audit the Expenses: Businesses should check the cash flow in-depth to make sure they are avoiding common payroll mistakes. It will also help to create a dedicated hiring plan that is affordable. In some cases, businesses might realize that hiring short-term employees is needed in comparison to hiring full-time ongoing staff to cut costs.
- Hire and Retain the Right Employees: Replacement of an employee has significant costs. A business enterprise decreases the overall cost associated with recruitment by retaining long-term valuable employees. Search for candidates that have an impressive track record, are aware of the business culture, and come prepared. Once the employees are on-board, ensure that a relationship is developed while providing ways for ample employee growth, which will ensure that employees might stay in their respective roles.
- Increase Prices: It is an effective way to improve cash flow. Customers will not be happy with the overall price hike. However, businesses should keep in mind that competitors will also be forced to do it. It is important to keep track of the trends and not raise prices too high.
- Update Technology: Businesses can consider automating specific aspects of the job while looking for ways to minimize production costs. Investing in a reliable payroll software solution for small businesses can help in freeing up time. Such a software solution is simple enough for businesses to learn how to execute payroll on their own.
Which State has the Lowest Minimum Wage Every Hour?
The states featuring the lowest value for minimum wage are Wyoming ($5.15) and Georgia ($5.15). However, employers in Wyoming and Georgia who come under the regulations of the Fair Labour Standards Act are still expected to pay a federal minimum wage of $7.25.
As per the Department of Labour and Workforce Development in New Jersey, around 100,000 workers in the state earn the minimum wage now. As per the estimates, around 1 million workers in New Jersey will ultimately be affected by the subsequent increases by the time of 2024. Several cities and states across the nation have passed related laws to increase the rates of minimum wages. These also include states that might be increasing the minimum wage to $15 every hour –including New York and California.
Delaware and New York are currently offering $11 every hour as the minimum wage and there are provisions for increasing the rate over time. Pennsylvania remains at the same federal level of the minimum wage of $7.25 every hour.
The pay raise in New Jersey has come as welcome news for most low-wage workers out there. However, critics believe that the overall economic downturn due to the COVID-19 pandemic should have made the state officials hit the pause button on the overall increase in the minimum wage as of now. The Governor of New Jersey disagrees.
He says that more federal assistance is required for helping small businesses in the state. Therefore, it is necessary to allow the minimum wage to continue with its march towards reaching the $15 mark. There are far too many people living below the poverty line in the state, so it is a major step in this direction.
Some fear that the eventual rise to $15 every hour might lead to significant job losses, but this will not be the case. Still, for small business enterprises coming off just after one brutal year, the extra expenses are quite real.