By: Douglas Klein
As we have written here and here, New Jersey recently passed legislation to increase the state's minimum wage to $8.50. Governor Christie has not announced whether he will veto the bill, and there is still the possibility of voters deciding the issue when they cast ballots in November. In New York, Governor Cuomo recently voiced his support for raising New York’s minimum wage from $7.25 to $8.50.New Jersey and New York, historically progressive when it comes to implementing legislation protecting workers’ rights, actually trail other states that have already taken action to increase minimum wage. Ten states – Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Rhode Island, Vermont and Washington – increased their minimum wage this month. Nine of these states also adopted an indexing model, which ties future increases in minimum wage to increases in the Consumer Price Index ("CPI"). New Jersey's pending minimum wage legislation has the same tie in to the CPI, though, as many opponents of the legislation have pointed out, it does not provide for decreases in minimum wage if CPI falls. The increases already enacted across the country affect nearly 1,000,000 workers who will now earn between $200 and $500 more annually. For employees, the increases are well welcomed, especially as the Social Security payroll tax holiday ended on December 31, 2012. For employers, these increases mean potential landmines. Increases in the minimum wage may reduce leverage at the bargaining table for unionized employers where unions will be less inclined to make concessions in other terms and conditions of employment to secure higher wages. Increases in the minimum wage may also reduce or eliminate a company's profits under a multi-year service contract where the company's bid was based on wages that are now below minimum wage. And, of course, DOL compliance audits will likely catch employers who are unaware that the wages they pay are now below the minimum wage, resulting in costly wage assessments and penalties. We will continue to monitor legislation affecting minimum wage and the impact on our business community. For more information on the potential increase to minimum wage in New Jersey and New York and our firm’s wage and hour compliance audit services, please contact John R. Vreeland, Esq., Director of the firm’s Wage & Hour Compliance Practice Group, firstname.lastname@example.org, or Douglas J. Klein, Esq., email@example.com.