Article by Ralph R. Smith, III, Esq.

As previously reported in this newsletter, a New Jersey Constitutional Amendment that was approved in 2013 requires that the state’s minimum wage rate be adjusted annually, effective January 1^st of each year, by any annual increase in the Consumer Price Index (“CPI”) calculated by the United States Bureau of Labor Statistics (“BLS”).  The CPI is the nation’s leading measure of inflation.  From August 2013 through August 2014, the CPI increased by 1.59%, meaning that there must now be made a corresponding 1.59% increase in New Jersey’s hourly minimum wage rate.  Accordingly, starting January 1, 2015, the New Jersey minimum wage will increase from $8.25 per hour to $8.38 in accordance with the requirements of this New Jersey Constitutional Amendment.

In light of this upcoming change in January 2015, employers must insure that payroll systems are properly adjusted to reflect the new minimum wage rate.  Because January 1 falls on a Thursday in 2015, the increase in the minimum wage rate may pose an administrative burden for some employers since the required increase might fall during the middle of a pay period.  For this reason, it may be wise for employers to implement the higher minimum wage before the start of the pay period that includes January 1^st if you as an employer would find yourself dealing with this possible administrative snafu in your payroll system.

This is the first, but most likely not the last, time that the minimum wage here in New Jersey will automatically be increased thanks to the Constitutional Amendment and its legal mandate requiring rate increases due to increases in the CPI.  Accordingly, it is wise for employers to keep a close eye during the upcoming year on this important economic indicator to track whether another automatic increase of the minimum wage will be forthcoming in January 2016.