Gradually increases the minimum wage for employees receiving gratuities.
Summary
H5507 amends Rhode Island’s minimum wage law for employees who customarily receive gratuities, such as tipped workers in restaurants, hotels, and similar industries. Under current law, employers may count a tip credit against the minimum wage and pay a lower cash wage to tipped employees. This bill keeps that structure in place initially but raises the required cash wage on a schedule beginning January 1, 2026, increasing it from $3.89 per hour to $6.95, then to $8.95 in 2027, $10.95 in 2028, $12.95 in 2029, and $14.95 in 2030.
Beginning January 1, 2031, tipped employees would have to be paid at least the full state minimum wage established under Rhode Island’s general minimum wage law, without relying on gratuities to satisfy the wage requirement. The bill also retains existing provisions on employer proof of the tip credit, employee hearings on deductions, incentive-based pay compliance, and the special rule for certain nonprofit full-time students. The act would take effect upon passage, but the wage increases themselves are delayed and phased in over several years.
Impact
The bill would significantly change Rhode Island General Laws § 28-12-5 by phasing out the tipped minimum wage and eliminating the tip credit by 2031. It would raise labor costs for employers in the restaurant, hospitality, and other tipped-worker sectors, while increasing guaranteed cash earnings for tipped employees and reducing reliance on gratuities to reach minimum wage. The measure would also require the Department of Labor and Training to continue administering proof and compliance rules for the tip credit during the transition period.
Sentiment
The bill’s caption and text indicate a pro-worker wage policy aimed at increasing pay stability for tipped employees. Although no committee transcript or recorded vote is provided, the bill’s introduction by multiple representatives suggests legislative interest in wage reform and support for gradually moving tipped workers toward the full minimum wage. The overall tone of the measure is reform-oriented rather than controversial in its drafting, with the main policy choice being the pace of the phase-in.
Contention
The likely point of contention is the elimination of the tipped wage system, which may be opposed by restaurant, hotel, and hospitality employers who could face higher payroll costs and operational changes. Supporters would likely argue that tipped workers should receive a higher guaranteed wage and less dependence on customer gratuities. The bill’s long phase-in schedule appears designed to balance those competing concerns by giving employers several years to adjust before the full minimum wage applies to tipped employees.