10 things you may not know (but should) before starting a business in N.J.
From minimum wage to hiring practices, the Garden State has unique rules that every small business owner must follow.
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With the ninth biggest state economy in the United States, and its proximity to large urban areas such as Philadelphia and New York, New Jersey is an attractive place to start a new business. But the state has many rules for doing business. So if you’re thinking of starting a business (or even if you already run a business) in the Garden State, here are 10 things you need to know.
1. N.J.’s minimum wage will be almost twice the federal minimum wage in 2023.
New Jersey’s minimum wage will be increasing from $13 per hour to $14.13 per hour for most employees beginning in January. The federal minimum wage will remain at $7.25 per hour. Workers in New Jersey have a right to be paid the higher minimum wage.
2. Additional employee notice posters are required depending on where you are.
New Jersey employers with generally more than 50 employees are required by the state to post certain publications from the state Department of Labor and Workforce Development about employment insurance, temporary disability benefits, and other worker rights. But if you’re in Trenton, Newark, New Brunswick and certain other cities, you must also display additional notices because of local requirements on paid sick leave and time off.
3. Many professional occupations require state licensing.
New Jersey is considered to be one of the “most licensed” states in the country, requiring licensing for professionals who practice in areas such as architects, funeral directors, nutritionists, hair stylists, court reporters, and art therapists. If you’re a professional, or a freelancer, and you want to provide services in the state, it’s possible that you’ll need to be licensed.
4. Harassment training isn’t required ... yet.
In 2020, Gov. Phil Murphy introduced a bill that would require employers to have mandatory harassment training for employees and managers, similar to what California and New York require. The bill is still in committee but has a good chance of passing in 2023.
5. Asking about prior convictions and salary history is a no-no.
If your New Jersey-based business has more than 15 workers (located anywhere in the country) and you’re interested in a prospective employee, under state law you are not allowed to require that candidate to disclose any prior criminal record information — and you’re not allowed to search for this information online — until after you’ve conducted a first interview. And regardless of the size of your business, you’re not allowed to ask any prospective employee about salary or benefits history.
6. You are required to report new hires to the state.
To track workers who may no longer be eligible for unemployment or who are required to pay support services, certain state agencies require employers to report all hired and rehired employees (including those who return to work after 60 days because they were laid off, furloughed or granted a leave without pay, or terminated) to the state within 20 days of their hire date.
This includes not just full-time employees, but also part-time and temporary workers. Recalled employees include anyone who remains on the payroll during a break in service or gap in pay and then returns to work, such as teachers and seasonal workers.
7. Some businesses are required to help with commuter expenses.
Businesses with more than 20 employees in New Jersey are now required to help their workers with commuting expenses including the costs of subway, train, bus or ferry, parking, or even an Uber by providing them the ability to save money pretax that can be used for the commute. Other than setting this up on their payroll program, employers should not incur additional costs. However, the federal government allows a pretax commuter benefit of $280 month, so it could be a big benefit to workers.
8. Whistle-blowers are protected.
New Jersey’s Conscientious Employee Protect Act — otherwise known as the Whistleblower Act — prohibits employers from taking any retaliatory action against employees who bring attention to any alleged wrongdoing from an employer or who refuses to participate in what they feel is an unlawful activity.
9. N.J. independent contractor rules are tougher than federal rules.
Although currently under review by the U.S. Department of Labor, New Jersey’s independent contractor regulations have, for years, followed the “ABC Test” for determining worker classification. Under this state law, companies must prove that:
A: The contractor has been and will continue to be free from control or direction over the performance of work performed.
B: The work is either outside the usual course of the business for which such service is performed, or the work is performed outside of all the places of business of the enterprise for which such service is performed.
C: The contractor is customarily engaged in an independently established trade, occupation, profession or business.
If any of these tests are not met, then the contractor may need to be classified as an employee.
10. There are great resources to help you get your business started.
If you’re looking to start a business in New Jersey, or even want help growing your business, I can recommend two great resources. The first is the Small Business Development Center, which is part of the U.S. Small Business Administration and has offices throughout the state. The other resource is the New Jersey Business Action Center.
Both nonprofit organizations exist to help business owners navigate the specific rules of the state and to provide training on business plans, tax filings, and collaborations with other organizations and agencies.
Gene Marks is a certified public accountant and the owner of the Marks Group, a technology and financial management consulting firm in Bala Cynwyd.