Proposed NJ Tip Adjustment Bill Would Be a Win for Servers but a Loss for Restaurant Employers

Waiters and waitresses in New Jersey are paid an hourly wage of $2.13, with the hopes that gratuities earned by the servers will make up for the difference between the minimum wage ($8.25 as of Jan. 1, 2014) and their meager hourly wage. A proposed bill in the Garden State may change that arrangement.

Bill A857 has already made it through the Assembly Labor Committee with a 5-3 vote and, if enacted into law, restaurant employers would have to pay servers $5.69 per hour, beginning Jan.1, 2016.

One sponsor of the NJ Tip Adjustment bill, Assemblyman Jason O’Donnell, said it was about establishing fair pay for servers who may not make enough in tips on a day-to-day or weekly basis. He said “tipped employees in New York and Connecticut are earning more than twice what tipped workers are earning here in New Jersey. Let’s give these employees a better foundation to build from and increase their minimum wage.”

However, restaurant owners are not happy about the proposed bill and the effect it could potentially have on their business. The president of the New Jersey Restaurant Association, Marilou Halvorsen, made the point that many servers make far more than $8.25 per hour, referencing PJ Whelihan’s, where she claimed servers earn $16 to $20 per hour.

If this bill becomes law, the immediate effect would be great for servers who would see their incomes rise. However, restaurant owners will have to find a way to offset those costs. They could factor the increased cost into consumer prices, but that may cause customers to go elsewhere. The other option employers would have is to cut back on wait staff to minimize hourly wages, which would mean fewer jobs.

At Garland & Mason, L.L.C., our attorneys have an in-depth understanding of state and national employment laws and have established a reputation as leaders in the industry. If you are an employer or employee and have an employment law issue or question, contact us today.

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