You’re sitting at your favorite local restaurant. Maybe it’s a cozy booth where the server knows your regular order, or maybe you’re perched at the bar chatting with a bartender who remembers your favorite drink. The food is great, the atmosphere is warm, and the service is seamless.
What you likely don’t know is that behind that great experience is a proven business model that helps make it all possible – the tip wage.
New Jersey’s restaurant industry is not only a key economic engine as the state’s third-largest private employer – it’s the heart of our local neighborhoods.
With more than 20,000 establishments employing over 375,000 people, restaurants across the state thrive on a system where tips are a meaningful part of take-home pay. This model allows servers and bartenders to earn far more than the minimum wage – while keeping costs manageable for owners and customers alike.
But now, Assembly Bill A5433 threatens to upend that system. The bill would eliminate the tip wage and require employers to pay tipped workers the full minimum wage before tips. While that may sound like a good idea on the surface, in practice it would hurt the very workers it aims to help.
Here’s the truth: Tipped employees in New Jersey already take home well above the state’s $15.49 minimum wage. Many earn $23 an hour or more once tips are factored in – some even double that. And under current law, if their tips ever fall short of the minimum wage, their employer is legally required to make up the difference. That’s not optional – it’s enforceable. If an employer fails to do so, they can be reported, investigated and penalized by the state. The protections are already there, they work, and we undoubtedly support them.
A statewide outcry from workers has made one thing abundantly clear: Tipped employees are not asking for this change. This was made evident April 10 when the bill was scheduled for a vote – and eventually moved to a hearing only – in the Assembly State and Local Government Committee at the State House. Over 150 tipped employees rallied in opposition to the bill, pleading with lawmakers not to disrupt a system that gives them flexibility, high earning potential and job satisfaction.
And we don’t have to guess what happens when policies like this go into effect – we’ve already seen the fallout. In Washington, D.C., after Initiative 82 passed, restaurants responded by cutting shifts, reducing staff and replacing tipping with mandatory service charges. Tips dropped. Servers started earning less – not more. Many long-time restaurants shut down, and the warm, personalized dining experience diners love was replaced with a colder, transactional model.
New Jersey can’t afford to make the same mistake.
If A5433 were to pass, it will fundamentally – and unnecessarily – disrupt a system that works. It will reduce earning potential for workers, raise costs for employers and alter the culture and experience of dining out across the state.
So, the next time you’re enjoying a night out at your go-to spot – when your drink arrives just the way you like it and your server knows your favorite dish, remember: That moment is made possible by a system that works for everyone. Let’s not legislate it away.
The New Jersey Restaurant & Hospitality Association, along with the workers and owners we represent, urges lawmakers to listen to those most affected. Keep the tip wage intact. Preserve the partnership. Protect the industry.
Don’t break what’s already working.
Editor’s note: Daniel Klim is president and chief executive officer of the New Jersey Restaurant & Hospitality Association.
