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

Existing Law Regarding Tipped Employees

Rhode Island allows employers to take a tip credit against the general minimum wage, currently $12.25 per hour. Employers may pay tipped employees a wage of at least $3.89 per hour, so long as the tips for the week make up the difference ($8.36 per hour).

Employers are required to provide substantial evidence that the tips each employee receives each week bring their earnings to at least the minimum wage. That substantial evidence can be a form signed by the employee, listing their tips received for the week.

These requirements were not changed by the tip protection statute and remain in effect.

The New Statute

The new tip protection statute applies to tipped employees, which are any employees "engaged in an occupation in which the employee customarily and regularly" receives more than $30 per month in tips. The law applies to all employers in Rhode Island.

The tip protection statute makes clear that tips are the sole property of the tipped employee. Employers cannot take any part of a tip from an employee. The only exception is for deductions for credit card processing fees, which may be taken from an employee's tips, if the employer notifies the employee of the...

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