View all Articles

Rhode Island Tip Protection Law Takes Effect

On June 28, 2022, Rhode Island Governor Daniel McKee signed new “tip protection” law. The statute prohibits employers of tipped employees from retaining employee tips, creates new requirements for tip pools, and sets requirements for deductions from tips for credit card processing.

The law immediately went into effect upon signing, and it:

  • Prohibits employers from taking possession of tips received by their employees for any purpose, in line with federal law;
  • Establishes requirements for tip pools;
  • Clarifies that service charges may not be counted as tips received, but may be used to satisfy an employer’s minimum wage and overtime requirements; and
  • Allows employers to deduct a percentage from employees’ tips for credit card processing fees.

Next Steps for Employers

Employers should review and adjust their payroll practices, update any correlating written policies or procedures, and ensure these changes are communicated to affected employees.

In addition, multistate employers must also be mindful of applicable state laws which may differ from the Rhode Island law.

HR Works, headquartered in Upstate New York, is a human resource management outsourcing and consulting firm serving clients throughout the United States for over thirty years. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.