More than 150 restaurant operators, employees, and hospitality advocates descended on the State House Thursday to express their opposition to a proposal to eliminate the tip-credit system in New Jersey. The proposed bill, A5433, was scheduled for a vote in the Assembly State and Local Government Committee on Thursday but was changed to a discussion-only hearing.
“Our industry showed up in full force because we know what’s at stake,” said Daniel Klim, the New Jersey Restaurant & Hospitality Association president and CEO. “This bill could seriously disrupt a system that works – for both workers and businesses. It would raise costs, limit opportunities, and ultimately hurt the very people it’s meant to help.”
In New Jersey, tipped employees receive a minimum hourly cash wage of $5.62. If the minimum cash wage plus the tips received by an employee do not equal at least the full state minimum hourly wage of $15.49, current law mandates employers must pay the employee the difference.
As a result, a tipped employee’s total earnings must meet or exceed the state minimum wage. Many tipped employees, however, report earning well above the minimum wage when tips are factored in.
The legislation was introduced on April 4 that would eliminate New Jersey’s tip-credit system. 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, a fourth-term Democrat from District 15. She said the measure was “about economic justice.”
Some opponents of the bill cited the impact of a similar tip-elimination measure in Washington, D.C. That bill was passed by voters and implemented in May 2023, incrementally raising tipped wages to reach the District’s minimum wage of $17.50 an hour by 2027. A report from WTOP News in Washington, D.C., said that since the initiative passed, 74 restaurants have closed in the city.
“We’ve already seen the impact of eliminating the tip credit in Washington D.C.,” said Amanda Stone, NJRHA vice president of public affairs. “This policy forces operators to absorb significant payroll increases, leading to higher menu prices, fewer shifts, job losses, and unwanted changes to service models that negatively affect both customers and staff. We can’t afford to let this happen in New Jersey.”
Attendees shared personal stories and economic data to highlight the unintended consequences of the proposed legislation. Those who testified included longtime servers, small independent restaurateurs, national chain representatives, and hospitality students.
“It’s about preserving a system that works for everyone in the industry,” Klim said. “The truth is, servers are satisfied with the current model and aren’t the ones calling for this change.”
The leisure and hospitality sector in New Jersey employed 409,500 people as of February 2025, according to the U.S. Bureau of Labor Statistics.
