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.