Charles A. Yuen
December 16, 2013
Last month, New Jersey voters approved a constitutional amendment that would increase the minimum wage to $8.50 and tie future increases to the consumer price index (CPI). The incremental wage hikes, which take effect on January 1, 2014, are now part of the state constitution.
As we previously discussed on this Business Law Blog, the amendment was placed on the ballot after Gov. Chris Christie vetoed legislation to raise the minimum wage and proposed a more modest increase that would not be tied to CPI. Lawmakers initiated a referendum, and voters overwhelmingly approved it.
As of the start of the New Year, New Jersey will have one of the highest minimum wages in the country. New York will raise its minimum wage to $8.00 at the end of the year, with additional wage hikes phased in over three years. However, New Jersey is one of only ten states that link incremental wage increases to the cost of living.
Under the new constitutional amendment, the federal consumer price index for urban wage earners and clerical workers will determine future wage increases in New Jersey. The index, which is calculated by the Bureau of Labor Statistics, has grown at a fairly steady rate in recent years. For instance, it increased 2 percent from 2011 to 2012 and 3.5 percent from 2010 to 2011. There is no provision to lower the minimum wage should the CPI decrease.
The Rutgers Center for Women and Work estimates that the new law will impact approximately 275,000 New Jersey workers who earn less than $8.25 per hour. Many employers are working to make sure that their payroll systems reflect the wage increases. Additionally, companies are considering how to adjust wages on a yearly basis. These compliance efforts implicitly recognize that even small errors can lead to costly wage lawsuits.
If you have any questions about the new minimum wage law or would like to discuss the legal issues involved, please contact me, Charles Yuen, or the Scarinci Hollenbeck attorney with whom you work.