2020 New Jersey Tipped Minimum Wage
The 2020 New Jersey Tipped Minimum Wage is $3.13.
Effective 2020-01-01Source: NJ Department of Labor Announces Minimum Wage Increase (New Jersey Department of Labor and Workforce Development)Verified 2026-08-31
Compared with 2019
| Item | 2019 | 2020 | Change |
|---|---|---|---|
| Minimum cash wage | $2.63 | $3.13 | +$0.50 (+19.0%) |
Who it applies to
Employers in New Jersey who elect to take the tip credit for tipped employees
What changed this year, and why
New Jersey's minimum cash wage for tipped employees, set by the state Department of Labor, took effect on January 1, 2020.
Common questions
- What is the tip credit?
- The tip credit allows an employer to count a portion of a tipped employee's tips toward the state minimum wage obligation, so the employer may pay a lower direct cash wage.
- Does this rate apply to all tipped workers in New Jersey?
- The $3.13 minimum cash wage applies to tipped employees whose employers elect to take the tip credit under the state law that took effect on January 1, 2020.
What a tip credit is, and the cash wage underneath it
In New Jersey, the tip credit is the amount an employer can count from a tipped worker's gratuities toward meeting the state minimum wage. When an employer elects to take this credit, they pay the employee a direct cash wage that is lower than the full minimum wage, with the understanding that tips will make up the remainder. For 2020, New Jersey law requires employers who use the tip credit to pay tipped employees a cash wage of at least $3.13 per hour. This means the worker receives $3.13 in direct pay from the employer, plus whatever tips they earn, and the combination must equal at least the full state minimum wage. The tip credit allows employers to factor expected gratuities into their wage costs, but it does not relieve them of the obligation to ensure the worker's total compensation—cash wage plus tips—reaches the minimum wage threshold. Workers in New Jersey should understand that while their paycheck may show a lower hourly rate, the law requires their total earnings to meet the same minimum standard as other employees.
The law also establishes a credit that employers of tipped employees may take against the $11 minimum wage next year. Employers who elect to take the tip credit will be required to pay their tipped employees a cash wage of at least $3.13 per hour.
NJ Department of Labor Announces Minimum Wage Increase (New Jersey Department of Labor and Workforce Development)
When the tips do not get you to the minimum wage
In New Jersey, when an employer uses the tip credit to pay a tipped worker less than the full minimum wage in direct wages, the employer takes on a critical obligation. If the employee's tips combined with the direct cash wage do not add up to at least the full state minimum wage for all hours worked, the employer must make up the difference. This means the tip credit is not a blanket reduction in what the employer owes; it is conditional on the worker actually receiving enough in tips to reach the minimum wage threshold. For New Jersey tipped employees earning a cash wage of $3.13 per hour, this protection ensures that slow nights, off-peak shifts, or other circumstances that reduce tip income do not result in sub-minimum compensation. The employer cannot shift the risk of low tips onto the worker. If the math does not work out in any given pay period, the employer must cover the shortfall so that the worker's total earnings equal what they would have received at the full minimum wage.
Employers who elect to take the tip credit will be required to pay their tipped employees a cash wage of at least $3.13 per hour.
NJ Department of Labor Announces Minimum Wage Increase (New Jersey Department of Labor and Workforce Development)
The notice an employer owes you before it takes the credit
In New Jersey, before an employer can use the tip credit to pay a tipped worker less than the full minimum wage in direct wages, the employer must provide specific information to the employee. The law that establishes the tip credit against the $11 minimum wage requires employers to notify workers about the credit and how it affects their pay. This notice must come before the employer starts taking the credit, not after. For New Jersey tipped employees earning the cash wage of $3.13 per hour, this means their employer must explain in advance that they will receive a lower direct wage, that tips are expected to make up the difference, and what their rights are if the tips fall short. Without proper notice, an employer cannot legally apply the tip credit, even if the worker's total compensation ends up meeting the minimum wage. The notice requirement ensures that tipped workers in New Jersey understand the wage arrangement before they start work under it, rather than discovering later that their employer has been counting tips toward the minimum wage without their knowledge.
The law also establishes a credit that employers of tipped employees may take against the $11 minimum wage next year.
NJ Department of Labor Announces Minimum Wage Increase (New Jersey Department of Labor and Workforce Development)
When state law gives more than the federal rule
In New Jersey, when both state and federal wage rules apply to a tipped worker, the employer must follow whichever standard gives the employee more protection. The same principle that drives the state's minimum wage calculation—choosing whichever rate is higher—extends to the tip credit and its conditions. For New Jersey tipped employees, this means that if federal law would allow a lower cash wage than the $3.13 per hour required by state law, the higher state amount controls. Similarly, if federal law provides weaker notice requirements or looser limits on tip pooling than New Jersey imposes, the state's stricter rules apply. The most-protective standard ensures that tipped workers in New Jersey always benefit from the strongest available safeguard, whether it comes from Trenton or Washington. Workers do not need to figure out which government's rule is better; their employer is obligated to apply the one that results in the higher pay, the clearer notice, or the tighter restriction on how tips can be shared or retained.
The Labor Department sets the minimum wage for the coming year using either the rate specified in the law or a calculation based on the Consumer Price Index (CPI), whichever is higher.
NJ Department of Labor Announces Minimum Wage Increase (New Jersey Department of Labor and Workforce Development)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
NJ Department of Labor Announces Minimum Wage Increase (New Jersey Department of Labor and Workforce Development)
- Minimum cash wage
Employers who elect to take the tip credit will be required to pay their tipped employees a cash wage of at least $3.13 per hour.
Other years
Every New Jersey Tipped Minimum Wage year · Tipped Minimum Wage in every state