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New Jersey Federal Minimum Wage Alert

June 10th, 2007 Posted by Mark

The New Jersey minimum wage increased last October 1, 2006, to $7.15 per hour, up from the $5.15 per hour level that it had been at. But since then, there are advocates in the Garden State who are pushing for another increase to the New Jersey minimum wage. We already talked about them—they don’t want the New Jersey minimum wage law changed. They say there is no need for such a change, because the current New Jersey minimum wage bill already has a built in mechanism in it that would allow for increases to the state minimum wage to occur every year.

That is because the New Jersey minimum wage law passed last year also established in the state the so called Minimum Wage Advisory Commission. The commission’s one main job, according to the New Jersey minimum wage law, is to make sure that the state minimum wage is meeting the needs of the economy, the employers, and the employees of the state.

The commission could set up an annual increase to the New Jersey minimum wage based on the inflation index, the so called Consumer Price Index, so that the minimum wage would go up each year based on how much the cost of living in the state goes up. The commission has not decided to do this yet or not—and if they have, I have not heard about it yet—but they have the power to do so if they wanted to and felt it appropriate, and as I said, there are some labor advocates in the state already asking them to do this.

I bring it up because it could affect how much the federal minimum wage has to play in the New Jersey employer landscape. For instance, as it stands now, with the New Jersey minimum wage being $7.15 per hour, the federal minimum wage increase will not affect employers in the state any time soon. The first increase to the federal minimum wage—set to happen this coming July or so, in a few weeks—when the federal minimum wage goes from $5.15 per hour to $5.85 per hour, will still keep the federal minimum wage lower than the Jersey minimum wage. And as we know, when that is the case, all employers liable to pay a minimum wage must pay the higher of the two.

A year from that increase, in 2008 when the federal minimum wage goes from $5.85 per hour to $6.50 per hour, the New Jersey minimum wage will still remain higher than the federal minimum wage. Thus, again, the employers of the state will be paying the higher of the two—the New Jersey minimum wage.

But in 2009, when the federal minimum wage increases to $7.25 per hour, the New Jersey minimum wage could fall lower than it, if the Minimum Wage Advisory Commission does not act to increase the New Jersey minimum wage. That 10 cents might not seem like very much, but it would be enough to create a minimum wage bifurcation in the state—or a two part minimum wage system, whereby some employers in the state would still be paying the lower New Jersey minimum wage and some employers in the state would be paying the higher federal minimum wage.

What side of the coin you come up on would be determined by whether or not you have to follow the Fair Labor Standards Act. If you do, you’d pay the higher federal minimum wage. If not, you wouldn’t. All employers in the state, though, will need new federal minimum wage posters.