New Jersey Minimum Wage: How Much to Pay Employees

Wondering how much to pay employees in New Jersey? Read this guide about New Jersey minimum wage laws, rules for tipped employees, overtime pay and more. 

 

The information below was last updated September 2021. 

 

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What is the minimum wage in New Jersey?

To ensure your business is managed effectively and in compliance with government regulations, it’s essential to understand minimum wage laws. The current minimum wage in New Jersey is $12.00 per hour. Some employees are exempt from the regular minimum wage rate, such as high school or college students, minors, tipped employees, agricultural employees and seasonal or nonprofit workers.

 

New Jersey minimum wage laws

Federal and state governing bodies in the U.S. create minimum wage laws to ensure that employees are protected from labor exploitation and receive fair compensation for work performed. These laws are often designed with the minimum livable wage and standard of living for that area in mind, so employees can comfortably access basic needs.

 

The minimum wage in New Jersey is $12.00 per hour, as of January 1st, 2021. New Jersey has raised its minimum wage each year since 2019 from $8.45 per hour to the current rate. The state has plans to continue raising the minimum wage by $1 every year until it reaches $15 per hour in 2024. Plans for minimum wage following 2024 are undefined and will likely be assessed according to adjustments in the cost of living and other economic factors in New Jersey. 

 

Certain types of employees are exempt from statutory minimum wage, including:

 

  • Full-time students employed by the college or university they’re enrolled at
  • Outside salesperson
  • Motor vehicle salesperson
  • Part-time employees in a caregiving setting for children
  • Minors under 18 (some exceptions according to industry and tasks)

Employees in seasonal or small business roles receive a minimum wage rate of $11.10 per hour, while agricultural employees are entitled to $10.44 per hour. High school or university students employed by their school may have the statutory minimum wage reduced by up to 85%.

 

Even if an employee is exempt from the New Jersey minimum wage, they may still be entitled to the federal minimum wage rate if they’re a nonexempt employee covered by the Fair Labor Standards Act (FLSA).

 

Employers should provide the Wage and Law Abstract poster to employees and post it in an obvious and accessible place within the business. It provides information for employees regarding minimum wage rates and progressions, overtime, exemptions, penalties and more.

 

According to the New Jersey Department of Labor and Workforce Development (DOL), employers who fail to provide minimum wage and “violate any provisions of this act shall be guilty of a disorderly persons violation and upon conviction shall be punished a fine of not less than $100 nor more than $1,000.” Employers may also be subject to administrative penalties of up to $500. The employer is also obligated to an administrative fee of “equal to or not less than 10% or more than 25% of any payment due to employees.”

 

New Jersey minimum wage for servers and other tipped employees

In most states, the minimum wage rate is different for servers and other tipped employees. The New Jersey minimum wage rate for tipped employees is $5.13 per hour. If an employee is exempt from minimum wage in New Jersey, they may still be covered by FLSA and entitled to the federal minimum wage for tipped employees.

 

Tip credits

A tipped employee’s regular hourly rate combined with their tips should equal the minimum statutory wage. If their wages and tips do not meet the regular rate, the employer is responsible for compensating the employee for the difference. For example, if an employee’s combined wages and tips are only equal to $10 per hour, then the employer is required to compensate the employee for the additional $2 per hour. In some cases, employers don’t need to compensate a tipped employee for statutory minimum wage, such as if they’re performing tasks unrelated to tipped duties.

 

Tip pooling

Some states allow employers to require their employees to contribute part of their tips to a tipping pool. The tipping pool is used to combine tips from employees and then distribute them equally, sometimes according to hours worked or shifts completed. Employers aren’t usually permitted to receive tips from a tipping pool.

 

Nonexempt employees are still entitled to statutory minimum wage. If employees’ wages don’t meet the minimum wage after the tipping pool has redistributed tips, then the employer must make up the difference.  

 

Types of tipped employees

Some states define tipped employees by a minimum amount of tips they receive on a regular basis. New Jersey doesn’t specify a minimum amount, but types of tipped employees might include:

 

  • Estheticians
  • Spa employees
  • Bartenders
  • Restaurant servers and hosts
  • Personal transportation services

Ensure that employees are paid minimum wage

To stay in compliance with New Jersey minimum wage laws, employers should meticulously account for all earnings and tips an employee receives. Certain earnings outside of the regular wage may not be legally counted towards tips, such as mandatory service charges or commissions, and as such can’t be counted towards minimum wage. To best keep track of earnings, consider using a payroll and wage reporting system that can account for all cash and credit card tips, as well as wages and other earnings. 

 

New Jersey minimum wage overtime pay

Employers are required to pay employees overtime if they work in excess of 40 hours in a given workweek. Overtime is not owed for holidays or weekends. Some salaried employees who are employed in an executive, administrative, professional or outside sales role may be exempt from overtime. However, employees who are exempt from New Jersey overtime regulations may still be entitled to overtime from the FLSA. 

 

Overtime rates are calculated by at least one and a half times the employee’s regular rate for each hour worked over 40 hours in a week. Using the weighted average method, the total gross wages are divided by the total hours worked to determine the hourly wage rate. That rate is then divided in half to determine the half-time rate owed to employees. 

 

New Jersey minimum wage FAQs

What states have a $15 an hour minimum wage?

While many states are in the process of increasing the minimum wage to $15 per hour, the District of Columbia is the only state to currently implement that rate. New Jersey is scheduled to increase the minimum wage to $15 by 2024. 

 

What is the minimum wage for a 16 year old in New Jersey?

According to the Child Labor Law, employees under the age of 18 are entitled to regular New Jersey minimum wage. Exceptions are related to the place of work or type of work performed but not to an employee’s minor status. 

 

What is a livable salary in New Jersey?

A livable wage is defined as a level of income necessary to provide an individual with a basic standard of living that allows them to access needs, such as housing, health care, food and other essentials. The livable wage in New Jersey is $56,000 per year, according to the World Population Review

 

What is the minimum a salaried employee can make?

Employees are entitled to a minimum wage under the DOL and a minimum salary if they’re covered by FLSA. New Jersey doesn’t have a defined minimum salary, but an employee who works an average of 40 hours per week, is paid by salary and entitled to minimum wage should earn at least $25,028 annually.

 

What is the federal minimum wage?

Nonexempt employees covered by the FLSA are entitled to a minimum wage of $7.25 or a minimum tipped wage of $2.13. Comparatively, eligible employees in New Jersey are entitled to a minimum wage of $12 per hour or a tipped minimum wage of $5.13 per hour. For federal or state minimum wages, employers are required to pay the difference if an employee’s wages and tips don’t meet the statutory minimum wage rate.

 

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