Article by Ralph R. Smith, III, Esq.

This past election, an overwhelming majority of New Jersey voters approved a constitutional amendment that will increase the state minimum wage by $1.00 to $8.50 an hour. Along with this increase in minimum wage that goes into effect on January 1, 2014, the newly ratified amendment also includes the potential for an annual automatic cost of living increase, to be assessed each September 30th, based upon any increase in the Consumer Price Index for all urban wage earners and clerical workers (“CPI-W”) as determined by the federal government. Moreover, should the federal minimum wage increase in any amount, the amendment further mandates that the state’s wage rate likewise be increased to match the federal minimum wage rate.

With the passage of this amendment, New Jersey is now the fifth state nationally with a constitutional provision concerning minimum wage rates; Florida, Colorado, Nevada and Ohio are the others, all of which have similar provisions requiring automatic increases as here in New Jersey. Even with the upcoming increase in minimum wage, New Jersey will not have the highest state minimum wage rate. That distinction still belongs to Washington state with a $9.19 an hour minimum wage.

Regardless of whether you were an employer who supported the minimum wage amendment, it is now the law in New Jersey and all employers on January 1 will need to comply with it. Since this compliance date is just around the corner, it is important that employers take steps now to insure that current payroll practices are in line with this new minimum wage requirement when it goes into effect. It is likewise important that every employer in the state pay close attention to any potential annual changes that may be made to the rate each time a review is conducted on September 30th based upon the  CPI-W.