If you’re doing business in New Jersey, you’ve got to keep up with changes in the Garden State’s employment and labor laws. Many legal changes that get passed during a legislative season go into effect on the first of every year – and 2022 is no different.
Is your New Jersey business ready to comply with legal changes on January 1st, 2022?
The best way to stay on top of changes in state and federal law is to work with a business lawyer who’s got your company’s best interests in mind. Proper and timely compliance with the law allows your business to operate without interruptions, penalties, or fines. Your business attorney can help you anticipate and implement new business policies in order to adapt.
When it comes to complying with new laws, it’s better to get started on the process sooner rather than later. You want to be prepared for legal changes before they come into effect, if possible. This ensures a much smoother transition for you and your employees. Failing to comply with these changes could leave you open to liability and employee lawsuits.
Higher Minimum Wage for New Jersey Employees
Starting January 1st, 2022, New Jersey is raising its minimum wage for most employees to
$13 an hour
. This is a dollar more than the 2021 minimum wage of $12 per hour and $5.75 more than the federal minimum wage. Your business must be in compliance with the new minimum wage by January 1st or you could face penalties or employee liability.
Some types of business and employees are still exempt from minimum wage laws:
- High school and college employees working part-time (up to 20 hours per week) must be paid a minimum of $9.35 per hour, or 85% of the standard minimum wage.
- Agricultural employees and farm workers must be paid a minimum of $10.30 per hour, or 70% of the standard minimum wage.
- Seasonal and small businesses must pay employees a minimum of $10.30 per hour.
- Workers under the age of 18 in certain roles such as in-home childcare may be entirely exempt from the state’s minimum wage laws.
- Tipped employees must receive a minimum cash wage of $5.13 per hour but their total wage earned including tips must be greater than or equal to $13 per hour.
Also remember that New Jersey allows employers to use tip credits and tipping pools, which are tightly regulated by the NJ Department of Labor and Workforce Development (NJDOL). Paying your workers improperly could cost you significant sums of money so it’s important to make sure you’re in compliance with all the relevant wage and hour laws.
How can you ensure that your business remains competitive and compliant?
- Carry out a financial audit of your cash flow and expenses. This will help you catch any common payroll mistakes and create a hiring plan your business can afford.
- You may be able to raise your prices. While customers are never happy about price increases, they’re a regular part of doing business. When raising prices, check and compare what your competitors are doing so that you don’t raise them too high.
- Look into automation and other tech solutions. You may be able to save large amounts in production or operational costs with new tech. This could be anything from new payroll management software to new manufacturing technology.
A business advisor such as a business attorney can help you analyze and take stock of your company’s current performance as well as trends in your industry.
The minimum wage in New Jersey will increase by $1 every year until 2024 when it will reach $15 an hour. The state currently has no additional local or city minimum wage laws.
Penalties for Employee Misclassification
Employee misclassification is a major workplace violation that can leave you vulnerable to thousands of dollars in lawsuits and penalties.
Misclassification happens when companies misclassify employees as independent contractors in order to avoid the cost of providing benefits and insurance to those employees. This is an illegal business practice that can get your company in hot water. Not only can you be fined and penalized by the government, but your workers could sue you in court.
In 2021, New Jersey Governor Murphy signed new bills into law that make it easier to identify companies who are misclassifying employees and penalize them for violations.
- Stop Work Orders and Injunctions – As of July 8th, 2021, the NJ Commissioner of Labor and Workforce Development has the authority to aggressively pursue wage, benefit, and tax violations in court and impose significant penalties on businesses found in violation. If the commissioner finds your business in violation, they could issue a stop-work order to pause your operations until you fix the issue. You could be fined up to $5,000 for each day that you continue business in violation of the stop-work order. Meanwhile, you must continue paying any affected employees for the first 10 days of the order. Additionally, the commissioner can take you to court and make you pay for attorney’s fees, litigation expenses, and investigation costs.
- Office of Strategic Enforcement and Compliance – A new state government office was created as a part of the NJDOL. Its purpose is to oversee and coordinate the enforcement of wage, benefits, and tax laws with other agencies. With an entire office dedicated to the issue, employee misclassification is under much greater scrutiny.
- NJ Insurance Fraud Prevention Act (NJIFA) Violations – Purposefully or knowingly misclassifying employees as independent contractors in order to save money on insurance premiums is a violation under the NJIFA as of January 1st, 2022. In addition to the other misclassification penalties, you could get penalized for insurance fraud. Fines start at $5,000 for the first violation, $10,000 for the second, and $15,000 each after that.
In order to keep on top of these legal developments, you should review and make any necessary adjustments to your workplace policies, employee handbooks, and independent contractor agreements. You should consult with a business attorney who can help you properly classify your workers as employees or independent contractors.
Call the Philadelphia offices of Holmes Business Law now at 215-482-0285 or schedule a call with our legal team. The sooner you get started on compliance for the new year, the better.