New legislation was introduced on Friday, April 4 that would eliminate New Jersey’s tip credit system. A vote for the bill is poised to take place on Thursday, April 10.
NJ A5433 would require restaurant owners to pay all workers the full state minimum wage ($15.49 per hour), regardless of the tips they receive. Currently, employers may count a portion of tips toward that wage. The legislation was introduced by Rep. Verlina Reynolds-Jackson of District 15.
Industry leaders warn the measure, as it is currently proposed, would put small businesses under strain, triggering job cuts, shorter hours, and higher menu prices. Additionally, the increase in costs for owners could force closure for independent restaurants across the state.
Critics of the bill say it threatens a pay structure that has long allowed tipped workers to earn well beyond the minimum wage. Anecdotally, when I was a bartender, I never once earned below the NJ minimum wage of $15.49 an hour. In fact, my tip-supported wages often soared comfortably above the minimum wage.
“The human component, our team, is a restaurant’s biggest asset, our most prized possession. Us opposing this bill is in an effort to protect our staff. When we say ‘protect’ we mean to make sure we can afford our payroll, maintain fair pricing for our guests, basically keep our doors open in an industry with such a small profit margin. Currently our employees make liveable wages, much higher than minimum wage,” said Neilly Robinson, a restaurateur in Central New Jersey. “We are protecting and creating a liveable wage. This bill would create a minimum wage job. We need less minimum wage jobs and more liveable wage jobs in America.”
On the other hand, proponents of NJ A5433 argue that the measure would put more power into the hands of workers with increased pay and stability.
According to most industry estimates, average tipped workers in NJ make around $22 an hour—some earn over $40 an hour. It’s important to note that employers are already required to ensure that tips and base wages meet or exceed the minimum wage. That means if a server or bartender has an especially slow pay period where pay (with tips) doesn’t meet the minimum $15.49/hour, the restaurant must make up the difference.
Others point to the skillset that current tip structure allows to flourish. “I think working in the service industry requires a skillset, and the better you are at your skill, the more money you make. Servers and bartenders at busy restaurants can make anywhere from $200 to $1000 per night in tips. On top of that, they’re getting the $5.62 tipped minimum wage from their employer. If they earn $500 on a busy night, they’re making $62.50 an hour in tips alone,” said Tania Kalian, a restaurant consultant in NJ. “The thing is, if an employer has to pay 176% more per employee per hour, they’re not going to survive as a business, and then there isn’t increased pay or stability for anyone. If you pass along that cost to the guest through higher menu prices, guests will not be able to afford to go out to eat as often. It’s a lose-lose situation for everyone, including the general public.”
In Washington, D.C., where similar legislation was passed, it led to significant staff reductions and fewer hours for remaining employees.
Ron Arnau, a Democrat running for State Assembly in District 40 says that the bill sounds great on paper, but hides a harsher reality. “As a small business owner who’s built payrolls from the ground up, I’ve balanced tough decisions with care for employees to keep businesses running. Conversations with chefs like David Viana of Heirloom Kitchen and Connor Brown of Ridgewood’s Lula highlight the fallout from this bill: A5433 pressures a tariff-strained industry, forcing businesses into tough choices and workers into financial uncertainty,” he said. “The Assembly is full of well-meaning people, but good intentions don’t always translate into effective policy. In this case, businesses are better equipped to support their employees than a one-size-fits-all mandate.”
The hospitality sector is the third-largest private employer in New Jersey. Business owners and workers argue that the proposed change would destabilize a vital part of the state’s economy, forcing closures, firings and an increase in prices.
Combined with a volatile economy, such a bill has the potential to significantly hurt restaurants with the brunt force of economic uncertainty.
The Assembly is scheduled to vote on the measure at 10 a.m. on Thursday.
Peter Candia is the Food + Drink Editor at New Jersey Digest. A graduate of The Culinary Institute of America, Peter found a passion for writing midway through school and never looked back. He is a former line cook, server and bartender at top-rated restaurants in the tri-state area. In addition to food, Peter enjoys politics, music, sports and anything New Jersey.
