Rhode Island has joined the list of states adopting laws governing the payment of tips. House Bill (HB) 7510, which is codified as Public Law 2022-245, mirrors nearly all tip-related aspects of the federal Fair Labor Standards Act (FLSA) and its regulations. The law became effective on June 28, 2022.
Under the law, tips are the sole property of the tipped employee. A “tipped employee,” just as under the FLSA, is one who regularly and customarily receives at least $30 in tips per month. Employers and employees are prohibited from entering into any agreement that would allow the employer to keep any portion of an employee’s tips.
Nevertheless, employers may implement a valid tip pooling or sharing arrangement among employees who customarily and regularly receive tips. To this end, employers must notify their employees of the amount of any required tip pool contribution amount, may take a tip credit only for the amount of tips each employee ultimately receives, and may not retain any of the employees’ tips except as required for distribution to a valid tip pool or to offset the actual charges assessed by a third-party credit card company (discussed further below).
If an employer does not take a tip credit and instead pays its employees full minimum wage, it may allow non-tipped, non-exempt employees to participate in a tip pool. Exempt employees, as defined under Part 541 of the FLSA regulations, may not participate in a tip pool whether a tip credit is taken or not. The...
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