Assembly approves bill to prohibit tip theft by employers

STATE HOUSE – The General Assembly today passed legislation sponsored by Sen. Meghan E. Kallman and Rep. David Morales to prohibit tip theft by employers.

The legislation (2022-H 7510A, 2022-S 2246A) would forbid employers from receiving any portion of the tips given by customers to their tipped employees, with limited exceptions for credit card service charges on those tips. The bill now heads to the governor.

“Our state already allows employers to pay a mere $3.89 minimum wage to tipped employees, with the understanding that tips will make up the rest of their wages. In no situation do those employers have any right to keep some portion of those tips. This legislation will protect hardworking members of the service industry from this unethical, but unfortunately common practice,” said Representative Morales (D-Dist. 7, Providence).

Said Senator Kallman (D-Dist. 15, Pawtucket, North Providence), “Tips are paid by customers to service industry workers for their good service. Customers — many of whom understand just how hard it is to make a reliable living in the tipped professions — intend for that their tip to go to that employee, not their boss. This legislation protects those employees and makes it clear that if an employer opts to pay a tipped wage rather than the standard minimum wage, they can’t skim from their employees’ tips.”

In Rhode Island, minimum wage is currently $12.25, but employers of tipped workers are allowed to pay a much lower tipped minimum wage, $3.89, as long as tips bring the employees’ wages up to at least $12.25 per hour.

Under the bill, the practice of tip pooling – where all the tipped employees pool their tips for even distribution — would still be allowed, but employers themselves still would not be allowed to take any portion. Only in workplaces where the employer pays at least the standard minimum wage, not the tipped one, would non-tipped employees be allowed to be included in the payout from tip pools.