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Posted on: February 1, 2019

Minimum Wage Signed into Law, Applies to Local Governments

On Monday, Governor Murphy signed legislation that will phase in the state minimum wage to $15/hour for most workers. This initiative has been a top legislative priority for Governor Phil Murphy, Senate President Steve Sweeney and Assembly Speaker Craig Coughlin, and the three negotiated for months over details. Unfortunately, language was added at the proverbial last minute which now makes municipalities subject the State Minimum wage law. The bills passed along party lines in both houses. The Governor has announced that he will sign the bill on Monday.

A-15/S-15 would gradually increase the minimum wage over several years, with the goal of getting to $15 per hour for most workers by the beginning of 2024. The first increase to $10 per hour would take effect on July 1, 2019, and then go up again to $11 on January 1, 2020. It will increase by $1 every year thereafter until January 1, 2024. After reaching $15 per hour, the minimum wage will continue to rise by the rate of inflation, as required by the State Constitution. The bill provides for a slower phase-in period for employees of small employers, and seasonal workers, reaching $15 in 2028.

Until Monday, the state minimum wage law only applied to private business and did not apply to state or local governing bodies. (See Allen v. Fauver 327 Super. 14 (App. Div. 1999)). These entities did need to comply with the federal minimum wage law. However, as noted above, new language explicitly applies the state minimum wage law to the state, counties, municipalities and school districts.

The League opposed the legislation because of the new language referenced above. Along with our allies, the Association of Counties and the School Boards Association, we argued that applying the wage increases to local governing bodies, which must operate within a hard 2% property tax levy cap, may ultimately force certain local governing bodies to either increase user fees or reduce or eliminate services. Further, we expressed disappointment that local governments were included in the legislation at the last minute, minimizing the ability of local officials to articulate their opinions and/or concerns with the proposal. Our thanks to our affiliate organization, the Government Finance Officers Association (GFOA), which quickly compiled and provided data to demonstrate the potential impacts on local budgets.

Ultimately, the local government coalition requested that the existing exemption from the state minimum wage law be maintained and that the Legislature conduct an analysis on the impact that applying the state minimum wage to local governments would have on their finances and operations.

Contact: Michael F. Cerra, Assistant Executive Director, mcerra@njlm.org, 609-695-3481, x120.


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