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 new 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.
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.
- 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.
- 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 2021?
On October 1, 2020, the Rhode Island minimum wage increased to $11.50, up from $10.50. Governor Gina Raimondo signed the bill raising the wage into law in March 2020. An estimated 25,000 to 30,000 Rhode Islanders earn the minimum wage, according to the state’s Department of Labor and Training.
There are current measures being considered that propose raising the Rhode Island minimum wage in 2021 and beyond. In order to eventually reach a $15 minimum wage, Rhode Island would have to enact a measure like HB 7570, which would raise wages by $1 each year until 2024 and by a percentage increase for cost of living from January 2025 on.
Are there plans to change the minimum wage beyond 2021?
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 Rhode Island minimum wage beyond this year.
How should small business owners prepare for changes to the minimum wage?
Rhode Island’s minimum wage rose in late 2020, many say as an attempt to catch up to neighboring states like Connecticut ($12) and Massachusetts ($12.75). 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.