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.