Rhode Island Tip Laws

Under the Fair Labor Standards Act (FLSA), tips are regulated. Employers who meet certain criteria are permitted to take a partial credit against minimum wage obligations for tipped employees. Tipped employees includes those engaged in jobs in which they regularly and customarily receive tips.

The tip credit was created by Congress in 1966, and adjustments occurred on December 28, 2021, when the 2021 Dual Jobs Final Rule went into effect. A federal court vacated portions of the final rule in October 2024, which effectively reinstated the original dual jobs regulation (29 C.F.R.531.56(e). It recognizes that an employee may work in tipped and non-tipped occupations, and employers are only permitted to take the tip credit against minimum wage obligations for hours worked in the tipped occupation.

The FLSA mandates that a tipped worker must be paid at least $2.13 per hour. The FLSA tip credit can be equal to the different between the direct (or cash) wage paid to the employee and the federal minimum wage. Only tips actually received by an employee count when making the determination of a tipped employee and applying the credit.

The FLSA also permits employees to “pool” or share tips with other eligible employees, although it doesn’t impose a limit on the amount or percentage of the contribution of each employee in a valid tip pool.

State law may differ from the federal FLSA standards. Review what tip laws apply in Rhode Island.

When Were the Tip Laws Last Updated in Rhode Island?

Tip laws in Rhode Island were updated in June of 2022. This change added new protections for tips.

Does Rhode Island Have Tip Laws That Differ from Federal Tip Laws?

Rhode Island generally adheres to the federal tip laws, although the tip credit amount differs as the statewide minimum wage is higher than the federal rate. The tip protection statute signed into law in 2022 applies to all tipped employees earning over $30 per month in tips.

Who Holds the Ownership of Tips in Rhode Island?

Under federal law, any gratuities paid to employees are their property. Employers are not permitted to require employees to hand in their tips, although they are allowed to count the tip toward the hourly rate.

What are the Rules for Distribution of Credit Card Processing Tips in Rhode Island?

Federal law states that all tips paid by credit card must be issued to employees no later than the next regular payday, even if the employer is awaiting reimbursement from the financial provider.

What are the Tip Pooling Rules in Rhode Island?

Employers are permitted to establish mandatory tip pools, but they must notify employees of the contribution amount. They are also not allowed to take a tip credit that exceeds what each employee received from the pool.

Who Can and Can’t Participate in Tip Pools in Rhode Island?

Tipped employees may participate. Non-tipped employees are generally exempt, including chefs, dishwashers, and cooks. Supervisors, managers, owners, and non-tipped employees also can’t participate.

Is there a Difference Between Tips and Service Charges in Rhode Island?

Yes, a mandatory service charge is not considered a tip. Therefore, it would belong to the employer.

To be considered a tip instead of a service charge, a customer must give money voluntarily in an amount of their own choosing. The customer must also be able to determine who receives it, and it can’t be set by employer policy.

Can Employers Deduct Credit Card Fees from Tips in Rhode Island?

Yes, employers may deduct credit card fees from tips as long as the employee is notified and the deduction doesn’t take the hourly rate below the statewide minimum wage.

Do Tips Count Toward the Minimum Wage in Rhode Island?

Yes, tips may count toward the minimum wage in Rhode Island.

Do Tips Factor Into Regular Rate Calculations for Overtime Pay in Rhode Island?

Yes, tips can factor into rate calculations for OT pay. Any eligible employee working over 40 hours in a week should receive overtime pay (1.5 times their normal hourly wage), and the employer is allowed to include the tip credit in that calculation.

Are There Cities and Municipalities in Rhode Island That Have Their Own Tip and Service Charge Rules That Differ from Statewide Laws?

No, there are no cities or municipalities with differing laws.

What Are the Record-Keeping Requirements for Employers Regarding Tips in Rhode Island?

Employers must keep detailed records of all tips reported by employees, including amounts and dates of service. If tip pooling is in effect, the record should also include the arrangements and the distribution of tips to eligible staff members.

What Options Do Employees Have for Remuneration if Their Tips are Withheld in Rhode Island?

An employee may take legal action against an employer who violates state tip laws.

What are the Penalties for Employers for Not Complying with Rhode Island Tip Laws?

Violating Rhode Island tip laws can subject an employer to civil or criminal penalties. Employees may also be permitted to recover the unpaid wages in damages.

Managing the regulations associated with tips in Rhode Island can be a challenge. But with WorkforceHub, your business can ensure accuracy. The numerical clock prompt feature allows the employee to input their received tips at the end of the shift, and that information would be available for reporting and payroll processing. Explore our selection of time clocks to find what works for your business.

RI Department of Labor & Training – Minimum Wage