Proposed Bill to End Tip Credits Draws Strong Pushback Across New Jersey

New Jersey – A state Assembly proposal aimed at phasing out the tip credit system in New Jersey is facing significant backlash from restaurant owners and workers alike, especially those in tourism-heavy areas like Cape May County. The legislation would gradually require employers to pay tipped workers the full state minimum wage, currently set at $15.49 per hour, without factoring in tip income. Presently, businesses can pay a cash wage of $5.62 and apply a $9.87 credit toward the minimum wage if employee tips make up the difference. Employers must cover any shortfall if tips fall short. Supporters argue the bill promotes wage equity and reduces worker exploitation. Opponents, however, warn of damaging consequences, including higher prices, job losses, and business closures, particularly within the hospitality sector. They also fear tipping may decline or disappear entirely.
At a recent hearing, a large number of critics voiced concern, pointing to similar legislation in Washington, D.C., which they claim led to restaurant closures and displaced workers. Cape May County, where hospitality jobs dominate the economy, could be especially affected. The bill is sponsored by Assemblywoman Verlina Reynolds-Jackson, who was not present at the hearing but issued a statement emphasizing the importance of fair pay for all workers. No vote was taken, and lawmakers say this is just the beginning of a longer legislative conversation.