Sophia Serrao
Thu, 07/21/2022
On June 28, 2022, Rhode Island passed new legislation to protect tipped employees. The tip protection statute prohibits employers of tipped workers from retaining employee tips, creates new requirements for tip pools, and sets deduction requirements for credit card processing fees.
Under the new statutes, “tipped employees” are employees who customarily and regularly receive more than $30 per month in tips. The tips are the sole property of the tipped employee therefore an employer cannot take any part of a tip. The only exception is for deductions of credit card processing fees, which may only be taken from the tips if the employer notifies the employee beforehand and the deduction does not bring the employee below the minimum wage. The statute requires tips to be paid no later than the employee’s regular pay day, and tips cannot be withheld because the employer is waiting for the credit card company to disburse the funds.
The statute outlines specific requirements for employees who participate in a tip pool. A tip pool can be created only amongst tipped employees. The employer must (1) notify the employees of the contribution amounts, (2) take a tip credit for only the amount actually received by each employee, and (3) not take any part of the tips for itself or non-tipped employees. A tip pool can only include non-tipped employees when the employer does not take a tip credit and pays above the minimum wage.
Rhode Island already has a tip credit provision that allows employers to take a tip credit against the state minimum wage. The tips that the tipped employee gets must cover the difference that the tip credit covers.
To find out more about rights for tipped employees, see our Restaurant and Food Services Resources page. If you think your employer is participating in an incorrect tip pool or incorrectly paying a tip credit, please contact us.
