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.
What is the minimum wage in Rhode Island?
The minimum wage in Rhode Island is $10.50 per hour. Rhode Island is one of 29 states whose minimum wage exceeds the federal minimum of $7.25.
Here are some of the exceptions to the $10.50 minimum wage and overtime pay rules, according to the Rhode Island Minimum Wage Act:
- Full-time students under 19 years of age working in nonprofit religious, educational, librarial, or community service organizations, who earn $9.45 per hour.
- Workers ages 14 or 15 who do not work more than 24 hours in a week. These employees earn $7.88 per hour.
- Workers employed in domestic service in or about a private home, federal service, or voluntary service in educational, charitable, religious, or nonprofit organizations where employer/employee relationships do not exist.
- Employees receiving gratuities, like restaurant and hotel employees, and certain employees of nonprofit entities. The tipped wage is $3.89.
Will the minimum wage change in 2020?
On January 1, 2019, the Rhode Island minimum wage increased to $10.50, up from $10.10. In 2017, the Rhode Island state legislature introduced 10 minimum wage increase bills, which remained in committees until Governor Gina Raimondo signed the state budget that August. That means that the minimum wage increases went into effect in 2018 and 2019 (and not in July 2017). Prior to these changes, the minimum wage was $9.60.
In February, Governor Raimondo proposed a 60-cent minimum wage increase, to $11.10, which would go into effect on January 1, 2020. Then, in June, the Rhode Island state Senate voted to increase the minimum wage to $11.50. If the measure is approved by the state House and signed into law by the governor, it will go into effect on January 1, 2020.
Are there plans to change the minimum wage beyond 2020?
The National Federation of Independent Business pushed back against the proposed increases, claiming that they would hurt small businesses that can’t afford the continued wage hikes. However, the state’s minimum wage has increased nearly every year since 2013. It remains to be seen whether there will be a rise in the 2020 minimum wage.
How should small business owners prepare for changes to the minimum wage?
Rhode Island’s minimum wage rose in 2018 and 2019, but it is unclear whether it will rise to match neighboring states like Vermont ($10.78), Maine ($11), and Massachusetts ($12). So, it’s a good idea to discuss Rhode Island’s minimum wage law 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 does increase:
- 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 payroll, you can spend more time focusing on issues like staffing and growing your business.