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Nothing in this article constitutes legal advice. Please consult a tax attorney or tax professional if you have questions about minimum wage compliance.
Small business owners in the Ocean State know how important it is to stay up to date on minimum wage regulations. You want to make sure you’re complying, of course. But staying aware of upcoming changes also lets you better plan for the future of your business.
That’s why we put together this quick guide with what you need to know about the minimum wage in Rhode Island in 2022.
What is the minimum wage in Rhode Island?
As of October 2022, the minimum wage in Rhode Island is $11.50 per hour. Rhode Island is one of 29 states whose minimum wage exceeds the federal minimum of $7.25.
Rhode Island does have a set of exceptions for the state mandated hourly pay. Like many other states, Rhode Island allows employers to pay tipped employees a minimum cash wage of $3.89 per hour, with a maximum tip credit of $7.61 per hour. Here are some of the other exceptions to the $11.50 hourly pay rate and overtime pay rules, according to Rhode Island minimum wage laws:
- Minors under 16 years of age working 24 hours per week or fewer can receive an hourly rate that is 75 percent of the minimum wage.
- Full-time students under 19 years old working for nonprofits have an hourly pay rate 90 percent of the state mandated minimum wage.
- Domestic service employees who work in a private home, federal service, or voluntary service in educational, charitable, religious, or nonprofit organizations where employer/employee relationships do not exist (e.g., newspaper carriers or golf course caddies) are exempt.
Will the minimum wage change in 2022?
In May 2021 the Governor of Rhode Island signed an amendment to join other states in aiming for a $15.00 minimum wage by 2025. The amendment specifies yearly increases in the state mandated minimum wage beginning January 2022 when the current $11.50 hourly rate will increase to $12.25. Following this increase, the minimum wage will jump to $13.00 in 2023 and then another $1.00 per hour at the beginning of each year until reaching $15.00 in 2025.
Minimum wage in Rhode Island
|January 1, 2021||$11.50|
|January 1, 2022||$12.25|
|January 1, 2023||$13.00|
|January 1, 2024||$14.00|
|January 1, 2025||$15.00|
Are there plans to change the minimum wage beyond 2025?
Given the fact that the amendment only specifies how much the minimum wage in Rhode Island is to increase each year up until 2025, it is not yet certain how the hourly pay rate will change beyond this set date.
How should small business owners prepare for changes to the minimum wage?
Rhode Island has joined a long list of states moving towards a $15.00 minimum wage within this decade. For this reason, it is important as a business owner to stay on top of these annual changes in state mandated hourly pay for employees. It’s a good idea to understand the federal minimum wage and discuss Rhode Island minimum wage laws with your accountant and lawyer to ensure that you remain in compliance.
Here are some other steps you can take to make sure your business is ready if the minimum wage in Rhode Island does increase again:
- Evaluate your staffing: Take a look at your hourly, weekly, and monthly sales to determine if your current staffing levels are appropriate. Based on those sales and the rest of your finances, make a plan for any future hiring. Maybe you need to add a new full-time employee each year. Or maybe your sales are seasonal and hiring contract employees during your busy seasons makes more sense.
- Hire the best: Hiring the right people is always important, but doubly so when you operate a small business. So take your time and cast a wide net when recruiting new employees. And once you have your team in place, make employee retention a priority by offering a path to growth and development and by making your business an attractive place to work.
- Upgrade your technology: When you automate complicated, time-consuming aspects of management, like automatic payroll, you can spend more time focusing on issues like staffing and growing your business. With Square Payroll software for small businesses, you receive expert support on tax filing, time tracking, fast payment options, and how to apply for a free EIN. You’ll find many helpful payroll features for your business, with small business pricing to fit your budget.