Proposed Legislation in New Jersey Targets Minimum Wage and Wage Withholding

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On Monday, December 17, 2012, the New Jersey Assembly approved separate legislation addressing (1) increases in the state’s minimum wage and (2) stricter enforcement against employers who withhold employee wages or benefits. 

Minimum Wage

The minimum wage bill proposes a constitutional amendment to raise the minimum wage to $8.25, which would make New Jersey among the higher minimum wage-paying states in the country.  The proposed amendment also ties future increases to the Consumer Price Index (“CPI”), thereby averting the need to pass additional legislation in order to increase the minimum wage.  The bill has been touted by proponents as a measure that is necessary to revitalize the New Jersey economy in the wake of Hurricane Sandy.  Opponents, on the other hand, argue that indexing the minimum wage to the CPI could result in a continuous escalation of labor costs, undoing any gains the State makes in improving business. 

The current bill is not the first New Jersey bill relating to minimum wage.  An earlier bill that proposed raising the minimum wage to $8.50 and tying future increases to the CPI was passed by the Legislature on November 29, 2012, but has not been signed into law by Governor Christie.  Anticipating that Governor Christie will veto the bill, the Assembly then passed the current bill in order to bypass the need for Governor Christie’s approval by seeking a constitutional amendment by the voters.  If the proposal for a constitutional amendment is approved by a majority vote by the Legislature again next year, the issue will go on the November 2013 ballot for voter consideration. 

Wage Withholdings

The second bill approved by the New Jersey Assembly is aimed at strengthening enforcement against employers who withhold wages or other benefits from workers.  The proposed legislation significantly increases fines and penalties against employers who improperly withhold such benefits.  The bill also imposes criminal sanctions upon employers who retaliate against employees who file complaints regarding improper withholdings under the statute.  Finally, the bill mandates that the State Attorney General notify the Commissioner of Labor and Workforce Development of an employer’s conviction for a violation and empowers the Commissioner, in turn, to temporarily or permanently close the employer’s business by revoking its business licenses.

The wage withholding bill was approved by the Assembly by a vote of 47-29.  Before becoming law, the bill must also be passed by the State Senate and approved by Governor Christie.  

Although neither bill has been passed, both have significant financial implications for employers in New Jersey in the event they are eventually voted or signed into law.  In addition, the wage withholding legislation also has the potential for even broader consequences in light of the fact that it empowers the Commissioner of the Labor and Workforce Development to revoke a business’s license in the event of a wage withholding conviction.   Accordingly, we will continue to monitor the progress of each bill and keep you apprised of any developments.