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New Jersey Tipped Employee Cash Minimum Wage Raise under Consideration

By James M. McDonnell and Beth L. Braddock
  • January 25, 2018

A bill to increase the hourly cash minimum wage paid to tipped employees in New Jersey has been introduced in the New Jersey State Assembly.

Currently, New Jersey employers may pay a tipped employee a cash minimum wage of $2.13 an hour and satisfy the remainder of the minimum wage ($8.60 an hour, effective January 1, 2018) through gratuities paid by customers. In order to lawfully utilize the tip credit against the minimum wage, employers must meet specific notice requirements.

The measure under consideration provides that an employer may take a tip credit of no more than 31 percent of the applicable minimum wage rate. If passed, the cash minimum wage an employer may lawfully pay a tipped employee would increase to $5.93 an hour, more than double the current level.

The bill, furthermore, expressly permits tip pooling among employees and requires employers to maintain records — for every pay period — that provide substantial evidence of the amount of the tip credit claimed and receipt of those tips by employees. Lastly, the bill would require the Commissioner of the Department of Labor and Workforce Development to promulgate notification requirements for employers.

As New Jersey Governor Phil Murphy has committed to raising the state minimum wage to $15.00 an hour, he may welcome the chance to sign this bill for tipped workers.

We will provide updates as the bill progresses through committee. Employers should regularly review their compensation and tip policies to ensure compliance as the minimum wage and the tip credit continue to be primary issues at the federal and state levels.

Please contact your Jackson Lewis attorney with any questions.

©2018 Jackson Lewis P.C. This Update is provided for informational purposes only. It is not intended as legal advice nor does it create an attorney/client relationship between Jackson Lewis and any readers or recipients. Readers should consult counsel of their own choosing to discuss how these matters relate to their individual circumstances. Reproduction in whole or in part is prohibited without the express written consent of Jackson Lewis.

This Update may be considered attorney advertising in some states. Furthermore, prior results do not guarantee a similar outcome.

Jackson Lewis P.C. represents management exclusively in workplace law and related litigation. Our attorneys are available to assist employers in their compliance efforts and to represent employers in matters before state and federal courts and administrative agencies. For more information, please contact the attorney(s) listed or the Jackson Lewis attorney with whom you regularly work.

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