The new minimum wage deal between Gov. Phil Murphy and the state’s top Democrats, to be voted on by the Assembly Labor Committee on Thursday, sets aside $10 million in new tax breaks to encourage businesses to hire workers with disabilities, according to draft legislation of Assembly Bill 15 obtained by NJBIZ.
Proponents of the tax credit, such as Senate President Stephen Sweeney, D-3rd District, said the measure is necessary to incentivize employers to add and keep disabled workers on the payroll.
“People with disabilities would probably be the first ones laid off” because of a minimum wage increase, Sweeney said at the NJBankers Association Economic Leadership Forum on Jan. 18.
“So creating an environment where it’s a positive thing to hire a disabled person, I think is a good thing,” he added.
Murphy said he expects to sign the minimum wage bill by the end of January. Both the Assembly and Senate have their last January voting sessions on Jan. 31.
The Senate Budget and Appropriations Committee will vote on the upper house version, Senate Bill 15, at their Jan. 28 meeting, followed by a Jan. 31 full floor vote, according to Senate staff.
Under the proposed tax credit, if a business has to pay a disabled employee more in the current year than they did previous year, because of the wage increase, that employer could count the pay difference as a tax credit against the taxes the employer already owes. The tax credit would be applicable to any wages paid after Jan. 1, 2019.
Under A15, both the state treasury and the Department of Labor of Workforce Development would oversee the program, including the application process and employer record-keeping.
Should the wage increase go through, employees would continue paying the minimum wage of $8.85 for the first six months until July 1, and $10 an hour for the remaining six months of 2019, coming out to $19,604, assuming the employee worked 40 hours a week all 52 weeks of the year.
Then, commencing Jan. 1, 2020, the minimum wage goes up to $11 an hour, with the minimum an employee could earn being $22,880 a year, assuming the employee worked 40 hours a week all 52 weeks of the year.
That $3,276 difference between 2020 and 2019 could be counted as a tax credit for the employer should they hire a worker with a disability. The employer would have until April 15, 2020 – the tax filing deadline – to pay their taxes and get the credits, or they could get the amount incrementally.
The statewide minimum wage would reach $15 an hour for most workers by 2024, under A15, which is sponsored by Assembly Speaker Craig Coughlin, D-19th District.
Seasonal workers and employees of businesses with less than five workers will see their wage raise to $15 an hour by Jan. 1, 2026.
Farm workers’ wages will increase to $12.50 an hour no later than 2024 and tipped workers will see the minimum rate go up from $2.13 an hour to $5.13 an hour.