New Jersey Assembly Democrats:Assembly Panel Advances Sumter, Caride, Egan & O'Donnell Bill to Increase the Minimum Wage for Tipped Employees

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Assembly Panel Advances Sumter, Caride, Egan & O'Donnell Bill to Increase the Minimum Wage for Tipped Employees

(TRENTON) - An Assembly committee on Monday advanced legislation sponsored by Assembly members Shavonda E. Sumter, Marlene Caride, Joseph V. Egan and Jason O'Donnell that would raise the minimum hourly wage for tipped employees.

"The minimum wage for tipped workers in New Jersey is $2.13 per hour, a paltry sum that has been frozen for more than 20 years and is lower than most states, including all of our surrounding states," said Sumter (D-Bergen/Passaic). "It is time for New Jersey to catch up."

"The minimum hourly wage rate for tipped employees has been stagnantly low for way too long. In an economy that has been slow to recover, it is imperative that we raise the rate for the sake of employees who rely on tips to supplement their income," said Caride (D-Bergen/Passaic).

The bill (A-857) would increase the minimum hourly wage that must be paid to employees that customarily and regularly receives gratuities or tips.

The bill would provide that:
  • after Dec. 31, 2014, an employer may claim a credit for gratuities or tips received by an employee against the hourly wage rate paid to the employee in an amount not to exceed 60 percent of the minimum hourly wage rate required by law or the state constitution, whichever is greater; and
  • after Dec. 31, 2015, an employer may claim a credit for gratuities and tips in an amount not to exceed 31 percent of the minimum hourly wage rate required by law or the state constitution, whichever is greater.
By allowing the employer to claim these credits, the bill would effectively require employers to compensate their employees at an hourly rate of at least 40 percent of the minimum wage ($3.37 per hour) after Dec. 31, 2014, and an hourly rate of at least 69 percent of the minimum wage ($5.93 per hour) after Dec. 31, 2015 and beyond. The remainder of the employee's compensation may be comprised of tips or gratuities, as long as the employee earns at least the minimum hourly wage rate required by state law ($8.25). Most employees who rely on tips or gratuities are currently paid the federal minimum wage for tipped workers of $2.13 per hour.

"Workers who depend on tips are at the mercy of consumers. Not everyone is nor can afford to be a good tipper. Raising the minimum hourly wage for these employees ensures they are taking home an adequate paycheck to provide for themselves and their families," said Egan (D-Middlesex/Somerset).

"This is a matter of fairness and equitable pay," said O'Donnell (D-Hudson). "Tipped employees in New York and Connecticut are earning more than twice what tipped workers are earning here in New Jersey. Let's give these employees a better foundation to build from and increase their minimum wage."

The bill would also require every employer, for every pay period and for every employee that customarily and regularly receives gratuities or tips, to provide substantial evidence that the amount claimed for the credit of gratuities or tips was received by the employee and that no part of the amount claimed was returned to the employer. Lastly, the bill would require that every employer provide notification to any employee for which the employer claims the credit of gratuities or tips.

The bill was released by the Assembly Labor Committee.

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