Minimum wage

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On February 4, 2019, Governor Phil Murphy signed into law a bill (A-15) that will increase New Jersey’s minimum wage to $15 per hour by 2024 for the majority of New Jersey’s workers.  Pursuant to the new law, the State’s minimum wage, which is currently $8.85 per hour, will increase according to the following schedule:

  • $10 per hour on July 1, 2019
  • $11 per hour on January 1, 2020
  • $12 per hour on January 1, 2021
  • $13 per hour on January 1, 2022
  • $14 per hour on January 1, 2023
  • $15 per hour on January 1, 2024

Notably, certain types of employees are placed on a slower path to $15.  For example, seasonal workers and employees working for businesses that employ 5 employees or less will not reach $15 per hour until 2026.  The minimum wage for farm workers will increase to $12.50 by 2024, with the possibility to attain $15 per hour by 2027 if approved by state officials.

New Jersey has now joined California, Massachusetts, New York, and Washington D.C., as well as other cities and localities, in raising the minimum wage to $15 per hour.

New York employers should be ready to kick-off 2018 with a slew of updated policies and procedures to ensure compliance with the State’s changing legal landscape.  As we say “goodbye” to 2017, New York must say “hello” to the following laws, whose impact will surely be felt in the coming year:

  • The New York Salary History Law went into effect on October 31, 2017, making it illegal for an employer to inquire into a prospective job applicant’s salary or to rely on that history during the hiring process. We previously blogged about The New York Salary History Law (posts available here 4-7-17, 5-17-17, and 10-27-17), and its potential effect on the gender pay gap will certainly be watched with interest by those both within and outside New York.
  • The controversial New York City Fair Workweek Laws went into effect on November 26, 2017, consisting of 5 bills that directly impact New York City fast food restaurants and retailers by curtailing employers’ flexibility to establish and modify employee work schedules. We previously blogged about the New York City Fair Workweek Laws (posts available here 11-6-17 and 6-19-17), and this is another law to keep a close eye on given its wide ranging potential to affect an entire industry.
  • In accordance with legislation signed by Governor Andrew Cuomo in April 2016, effective December 31, 2017, small and large employers in New York City will see minimum wages rising to $12.00 and $13.00 per hour, respectively. Likewise, employers in Westchester, Nassau and Suffolk Counties will be subject to a $1.00 per year increase of the minimum wage to $11.00 per hour until it reaches the $15.00 per hour threshold on December 31, 2021.  Additionally, all other employers in New York will be required to raise the minimum wage another $0.70 (to $10.40) until it reaches the minimum wage of $12.50 per hour in December 2020.  We previously blogged about this legislation last year (post available here 4-28-16).
  • Perhaps the most highly anticipated law affecting employers and employees alike is the New York Paid Family Leave Benefits Law, effective on January 1, 2018. The law provides eligible employees with 8 weeks of paid leave per calendar year (increasing to 10 weeks in 2019 and 12 weeks in 2021) for events including: (i) participation in providing care, including physical or psychological care, for a family member with a serious health condition; (ii) bonding with a child during the first 12 months after the child’s birth, or the first 12 months after the child is placed with an employee for adoption or foster care; or (iii) any qualifying exigency as interpreted under the federal Family and Medical Leave Act (FMLA), relating to when a spouse, domestic partner, child, or parent of the employee is on covered active duty or called to active duty status.  The benefits are funded through employee payroll deductions, and employees are entitled to job protection and continuation of certain benefits during family leave.  The impact of the New York Paid Family Leave Benefits Law will surely be felt immediately by employees and employers alike.
  • On May 5, 2018, New York City will expand the types of leave covered by the Paid Sick Leave Law, which will soon be known as the “Earned Safe and Sick Time Act”. The Act will be expanded to cover “safe time” leave which can be used by an eligible employee to: (i) obtain services from a domestic violence shelter, rape crisis center, or other shelter or services program; (ii) participate in safety planning, temporarily or permanently relocate, or take other actions to increase the safety of the employee or employee’s family members; (iii) meet with a civil attorney or other social service provider to obtain information and advice on, and prepare for or participate in, any criminal or civil proceeding, including, but not limited to, matters related to a family offense matter, sexual offense, stalking, human trafficking, custody, visitation, matrimonial issues, orders of protection, immigration, housing, or discrimination in employment, housing or consumer credit; (iv) file a complaint or domestic incident report with law enforcement; (v) meet with a district attorney’s office; (vi) enroll children in a new school; or (vii) take other actions necessary to maintain, improve or restore the physical, psychological, or economic health or safety of the employee or the employee’s family member or to protect those who associate or work with the employee.  The law will still require employers to provide up to 40 hours of paid leave, which employees can now use for “safe time” in addition to sick time under the Act.

The approaching holiday season is a good time for employers to carefully review their handbooks, policies, and procedures to ensure compliance with the labyrinth of New York requirements.  Companies should, at a minimum, ensure that their human resources, benefits coordinators, and other key administrators are familiar with the above laws and their attendant requirements, and that the information is timely communicated to their workforces.

Employers are well advised to ensure that they start the New Year on the correct foot as many laws have effective dates in a few short days and weeks.  Among the most notable changes are the following:

Minimum Wage

New Jersey’s minimum wage will be $8.44/hr. effective January 1, 2017.  Similarly, in New York City, the minimum wage will be $11.00/hr. for workers employed by “large employers”  with 11 or more employees.  For those “small employers” with less than 11 employees, the minimum wage is $10.50/hr. effective January 1, 2017. Other minimum wage rates will apply depending on the location within the State.

“White Collar Exemption” Salary Threshold Level – New York

Although the federal overtime Final Rule, which was set to be enacted on December 1, 2016, has been delayed for the time being, New York employers must pay attention to State law in this area.  Effective December 31, 2016, New York City “large employers” invoking a “white collar exemption” must meet the salary threshold of $825/wk.  Accordingly, assuming an employee meets the duties test, in order for an employer to treat the worker as exempt from overtime, the worker must earn at least $825/week on a salary or fee basis.  For “small employers” the salary threshold is $787.50/week, also effective December 31, 2016.  These levels are set to increase over the next few years and, like the minimum wage, the amounts will differ in other parts of the State.

Bathroom Law – New York

Effective January 1, 2017, New York City employers, including bars and restaurants, must remove any signs designating single-occupancy bathrooms as being for a certain gender.  The law does not require physical alteration of a single-occupant bathroom, but instead only requires the posting and maintenance of appropriate gender-neutral signs.

OSHA’s Injury Reporting Requirements

The Occupational Safety and Health Administration (“OSHA”) has new injury reporting requirements that go into effect January 1, 2017 and will phase in over 2 years.  One of the primary changes is that employers will be required to electronically submit the summary of injuries and illnesses to OSHA.  OSHA’s new rule is based on the premise that employers will be more likely to focus on safety if their injury information is publicly available.  The new OSHA rule also prohibits retaliation against employees who report work-related injuries, and requires employers to inform employees of their right to be from retaliation.

Revised I-9 Form

U.S. Citizenship and Immigration Services (USCSA) has issued a new Form I-9, which employers must begin using on January 22, 2017.  The new form can be found here and will be valid until August 31, 2019.  Employers can be fined for using an expired version of the I-9 form.

Employers may complete the new form in either a “smart” PDF version (if completed on a computer using Adobe reader) or by hand using paper.  Either way the employee or employer’s representative must sign the completed form.

There are a few significant changes to the new Form I-9.  First, the form requests “other last names used”, rather than “other names used.”  In addition, employees who identify as “alien authorized to work” must list only one number from among the employee’s alien number, I-9 for admission number and foreign passport number.  Previously employees had to list multiple numbers.

Of course, given the incoming administration’s public comments on immigration  changes, all employers are well advised to keep abreast of these changes and ensure compliance with all immigration obligations.

On April 4, 2016, Governor Andrew Cuomo signed legislation in connection with New York’s 2016-2017 budget that will impact employers large and small throughout the State.  In addition to annual increases to the minimum wage that will ultimately reach $15.00 per hour, the legislation also provides for up to 12 weeks of paid family leave for qualifying employees.

Minimum Wage Increases

The timeframe for the increased minimum wages is determined by both an employer’s geographic location and size.  Specifically, wages will increase under the following schedule:

  • Employers Within New York City: On December 31, 2016, the minimum wage for “small” employers with 10 or fewer employees will increase to $10.50 per hour, while wages for “large” employers (11 or more employees) will rise to $11.00 per hour.  Small and large NYC employers will see minimum wages rise to $12.00 and $13.00 per hour by December 31, 2017, and then $13.50 and $15.00 per hour by December 31, 2018, respectively.  By December 31, 2019, however, all NYC employees will be entitled to $15.00 per hour in minimum wage.
  • Employers in Westchester, Nassau and Suffolk Counties: Employers in these 3 counties will be subject to a $10.00 per hour minimum wage on December 31, 2016.  This amount will increase by $1.00 every year until it reaches the $15.00 threshold on December 31, 2021.
  • All Other New York Employers: For employers outside of the noted high-density geographic region in and around NYC, the New York minimum wage will increase to $9.70 per hour on December 31, 2016.  It will then rise by increments of $0.70 every December 31 until the year 2020, by which time the minimum wage will have reached $12.50.  The New York Director of the Division of Budget and the Commissioner of Labor will establish a schedule for annual increases thereafter until the minimum wage reaches $15.00 per hour.

Tipped employees in the hospitality industry will have their minimum wage calculated by the greater of (1) two-thirds of the current minimum wage in their locality (rounded to the nearest $.05), or (2) $7.50.  Employers must ensure that these employees receive tips sufficient to bring their total wages (i.e., wages and tips) to meet or exceed the current minimum wage in effect for non-tipped employees in that geographic location.

Paid Family Leave

The April 4th legislation also provides up to 12 weeks of paid family leave for eligible New York employees who are employed by “covered” employers (as defined under New York law).  To qualify, employees must have worked at least 26 calendar weeks with their current employer and seek leave for any of the following reasons:

  • to provide care for a family member suffering a serious health condition;
  • to bond with the employee’s child during the first 12 weeks after birth (or the first 12 weeks after a child is placed with the employee for adoption or foster care); or
  • based upon a qualifying exigency under the federal Family and Medical Leave Act as a result of a qualifying family member’s “active duty” status with the United States military.

The amount of paid leave will increase each year starting January 1, 2018, where eligible employees will first be entitled to 8 weeks of paid leave, and ultimately 12 weeks by January 1, 2021.  Over that time, the amount of paid leave benefits will increase as follows:

  • January 1, 2018: 8 weeks of paid leave at 50% of the employee’s average weekly wage (capped at 50% of the New York average weekly wage);
  • January 1, 2019: 10 weeks of paid leave at 55% of the employee’s average weekly wage (capped at 55% of the New York average weekly wage);
  • January 1, 2020: 10 weeks of paid leave at 60% of the employee’s average weekly wage (capped at 60% of the New York average weekly wage); and
  • January 1, 2021: 12 weeks of paid leave at 67% of the employee’s average weekly wage (capped at 67% of the New York average weekly wage).

New York employers should begin preparing themselves now for these important changes to the minimum wage and paid family leave laws, including conducting a comprehensive review of their employee handbooks and policies and an internal audit of their compensation structures.  While the minimum wage and paid family leave requirements will take effect gradually over the next few years, New York employers must be ready to adopt them in order to avoid running afoul of their new statutory obligations.

 

In a unanimous opinion issued on January 14, 2015, the New Jersey Supreme Court determined that the “ABC test” governs whether an individual is an “employee” or an “independent contractor” entitled to the protections of New Jersey’s Wage Payment Law and Wage and Hour Law.  See Hargrove v. Sleep’s, LLC, A-70-12 (Jan. 14, 2015) (Slip Op.).  The Supreme Court issued this ruling in response to a question from the Third Circuit Court of Appeals in connection with litigation over whether Sleepy’s, LLC misclassified delivery drivers as independent contractors to avoid providing benefits, such as overtime pay, to those workers.  A copy of the New Jersey Supreme Court’s decision is available here.

New Jersey’s Wage Payment Law governs the timing and mode for the payment of an employee’s wages, while New Jersey’s Wage and Hour Law mandates the minimum wage and overtime benefits that employers must pay to their employees.  The so-called “ABC test” is one of many different tests utilized to determine whether a particular individual qualifies as an “employee” or an “independent contractor”.  N.J.S.A. 43:21-19(i)(6).  Under the ABC test, the court presumes an individual bringing a claim qualifies as an “employee”.  The burden then shifts to the employer to demonstrate that the individual should instead be classified as an “independent contractor”.  The ABC test includes the following three factors:

(a)    Whether the employee has been and will continue to be free from control or direction over the performance of his or her services, both under a contract of service and in fact;

(b)   Whether the services provided are either outside the usual course of the business for which the service is performed, or that service is performed outside of all the places of business for the enterprise for which the service is performed; and

(c)    Whether the individual is customarily engaged in an independently established trade, occupation, profession, or business.

In holding the ABC test applies to both statutes, Judge Mary Catherine Cuff explained it provides predictability.  She also noted that the New Jersey Department of Labor had been utilizing the ABC test in determining whether an individual qualified as an “employee” under both statutes since 1995, without challenge.

For employers, the Hargrove decision underscores the importance of properly classifying workers as employees or independent contractors, both through contractual relationships and in practice.  Employers should examine their policies and procedures with legal counsel to determine compliance with the distinction between employees and independent contractors in order to avoid costly litigation and penalties for any violations.