Can New Jersey Employers Avoid Paying Minimum Wage?

Written by Sattiraju Law Firm on April 21, 2020

As of 2020, New Jersey’s minimum wage is $11.00 for most employers. Each year, it will increase a dollar until it maxes out at $15.00 an hour on January 1, 2024.

However, the law has many carve-outs for certain classes of employees. Other workers are also unprotected by the state’s unemployment laws.

Exempt Employees

New Jersey law exempts many classes of employees for various reasons. For example, it realizes that it is impracticable to pay a minimum wage to the following:

  • People who babysit a child in the employer’s home. This means you can pay the person who comes and babysits less than the minimum wage.
  • Car salespeople
  • Outside salespeople
  • Volunteers who receive incidental benefits for working at a nonprofit or religious employer

Other employees are exempt because the state wants to encourage that they be hired. This includes:

  • Workers under age 18 unless they work in certain industries such as laundry, retail, food service, and others
  • Disabled workers, so long as they receive a certificate from the Department of Labor and work for a charitable or nonprofit organization

Tipped Employees

Tipped employees are entitled to compensation that is equal to at least the state’s minimum wage. This means that their tips and wage combined must equal the minimum. If they don’t, then the employer must pay the difference.

Of course, the hourly wage portion can be less than the state’s minimum. As of January 1, 2020, the state suggests that employers pay tipped employees at least $3.13 an hour, though employers can ultimately pick the amount they pay. Tipped employees should pay close attention to their hours and how much they make in tips to ensure they are being paid at least the minimum.

Independent Contractors

An independent contractor is not an employee. Generally, this is someone with their own business who does work for many different clients. For example, a plumber that a business hires to unclog a toilet is an independent contractor because they have their own business and service many clients. If the plumber only worked for one company, however, then he begins to look like an employee.

Independent contractors are exempt from state and federal minimum wage laws. However, it is vital that this person is not a misclassified employee, in which case an employer can owe back pay and possibly overtime as well.

New Jersey has a test called the “ABC test” it uses to determine who is an independent contractor for purposes of minimum wage laws. As explained by the Supreme Court, the test begins with a presumption that a worker is an employee unless they satisfy all prongs of the ABC test:

  • The worker is free from the employer’s direction and control with respect to how they perform work
  • The work is outside the employer’s normal course of business or away from the employer’s place of business
  • The worker is engaged in an independently established business

Not Paid Minimum Wage in New Jersey? Contact Us Today for Help

The Sattiraju Law Firm has brought many actions for violations of the state’s minimum wage laws. Let us analyze whether you have a claim. Contact us today to schedule a free consultation.

Posted Under: New Jersey Employment Law
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