Rhode Island is taking a bold step to ensure fair pay for its workforce. As of 1 January 2025, the state’s minimum wage will rise to $15.00 per hour, marking an important milestone in a multi-year effort to improve living standards for workers.
This increase is part of a larger phased plan to gradually reach $17 per hour by 2027 and $20 by 2028. Read the below article to know simplified details on everything employers and workers need to know about the Rhode Island minimum wage increase, including exemptions, historical context, and compliance best practices.
Rhode Island Raises Bar: Minimum Wage Hits $17 by 2027
Governor Dan McKee has enacted new legislation to gradually raise Rhode Island’s minimum wage from $15 to $17 over the next two years. Starting 1 January 2026, workers will see $16 per hour, increasing to $17 per hour on 1, January 2027. Currently, around 50,000 residents earn the state’s minimum wage.
The Rhode Island General Assembly approved the wage hike with wide support, passing 55-10 in the House and 33-4 in the Senate. Democratic leaders, including Representative David Bennett and Senator John Burke, sponsored the bill to strengthen worker pay across the state.
Not all workers are required to receive the full minimum wage. Tipped employees can earn a base pay of $3.89 per hour, as long as their tips bring total earnings up to the minimum standard of $15 per hour. Certain exceptions also apply for youth workers and specific industries.
The scheduled wage increases aim to boost financial security for employees and inject more spending power into Rhode Island’s economy. Employers are encouraged to review payroll strategies and staffing plans to stay compliant while managing the effects of higher labor costs.
Quick View On RI Workers Minimum Wage Increase
| Category | Details / Rate | Notes / Exceptions |
|---|---|---|
| 2025 Minimum Wage | $15.00/hr | Applies to most employees over 16 |
| 2026 Minimum Wage | $16.00/hr | Scheduled increase |
| 2027 Minimum Wage | $17.00/hr | Scheduled increase |
| By 2028 | $20.00/hr (expected) | Part of phased plan |
| Untipped Workers | $15.00/hr | Standard rate for non-tipped employees |
| Tipped Workers | $3.89/hr base | Employer must ensure total wage + tips ≥ $15/hr |
| Full-time Students (<19) | 90% of state minimum | Works in nonprofit, religious, or educational orgs |
| Minors (14-15 yrs, ≤24 hrs/wk) | 75% of state minimum | If hours >24/week, full minimum wage applies |
| Seasonal / Resort Workers | Reduced rates allowed | Camps, seasonal resorts operating <7 months |
| Casual Labor / Domestic Work | Varies, often below state mini | Follow federal or special rate exemptions |
| Overtime Pay | 1.5x regular rate for >40 hrs/wk | Applies to part-time & full-time non-exempt workers |
| Recordkeeping | 3 years minimum | Includes wages, hours, deductions |
| Tip Credit | Employer must top up to reach $15/hr | Ensures tipped workers earn minimum wage |
Historical Perspective
Rhode Island’s commitment to fair wages has evolved over decades –
- 1947 – First minimum wage law set at $0.75/hr.
- 1976 – Minimum reached $2.65/hr, surpassing the federal rate.
- 1980s-1990s – Gradual annual increases tracked inflation and rising living costs.
- 2000s – Incremental increases brought the wage to $7.40/hr by 2007.
- 2010s – Annual increases continued, reaching $10.50/hr in 2019.
- 2021 – Governor McKee signed legislation targeting $15/hr by 2025.
This steady climb reflects Rhode Island’s focus on keeping wages competitive with neighboring states while improving workers’ financial security.
Minimum Wage Timeline in Rhode Island
Rhode Island has steadily increased its minimum wage over the last decade. The most recent schedule looks like this –
| Effective Date | Minimum Wage |
|---|---|
| 1, January 2022 | $12.25 |
| 1, January 2023 | $13.00 |
| 1, January 2024 | $14.00 |
| 1, January 2025 | $15.00 |
| 1, January 2026 | $16.00 |
| 1, January 2027 | $17.00 |
| By January 2028 | $20.00 (expected) |
This planned increase ensures workers keep pace with the rising cost of living while giving businesses time to adjust.
Why the Increase Matters?
Governor Dan McKee emphasized that “hard work should be met with fair pay.” The increase is expected to benefit approximately 50,000 Rhode Islanders earning minimum wage, allowing them to better meet everyday expenses such as food, housing, and healthcare.
Lawmakers argue that regular increases not only support workers but also stimulate the economy. When employees earn more, they spend more, creating a ripple effect that strengthens local businesses and encourages job growth.
Exceptions to the Minimum Wage
Rhode Island’s minimum wage laws include a few notable exceptions –
- Tipped employees
- Employers may pay a base wage of $3.89 per hour, but must ensure total earnings (including tips) meet at least $15/hour.
- Full-time students under 19
- Working for nonprofits, religious, or educational organizations may earn 90% of the state minimum.
- Young Workers (14-15 years old)
- If working 24 hours or fewer per week, they may earn 75% of the minimum wage.
- Seasonal or Resort Work
- Employees at camps or seasonal resorts with limited operating months may qualify for reduced rates.
Certain casual, agricultural, or domestic work is exempt from the standard state minimum wage, often following federal minimums instead. These exceptions help balance the needs of employers with fairness to workers in special circumstances.
Tipped vs Untipped Workers
Understanding the distinction between tipped and untipped workers is essential –
| Worker Type | Minimum Wage Rate | Notes |
|---|---|---|
| Untipped Workers | $15.00/hr | Standard for all eligible workers |
| Tipped Workers | $3.89/hr | Employer must supplement tips to reach $15/hr |
Tipped employees are protected to ensure they earn at least the state minimum when combining tips and base pay. Employers are responsible for making up any shortfall.
Federal vs State Minimum Wage
While the federal minimum wage remains $7.25/hr, Rhode Island has set a higher standard to match its cost of living. This tiered approach ensures that workers in the state earn a livable wage, even when federal guidelines are lower.
Some cities and counties also have local minimum wage laws that further exceed the state rate. Rhode Island’s phased increases put it on par with other progressive states aiming to reduce wage inequality.
Preparing Businesses For Minimum Wage Increases
Small businesses need to plan ahead to accommodate rising wages. Key strategies include –
- Evaluate staffing levels – Adjust schedules or hiring plans to balance labor costs with sales demands.
- Recruit and retain talent – Competitive wages help attract and retain skilled employees.
- Automate payroll – Use software to manage wage calculations, overtime, and compliance easily.
- Monitor exemptions – Ensure young workers, tipped staff, and seasonal employees are paid correctly.
- Track overtime and recordkeeping – Maintain detailed payroll records for at least three years, as required by law.
Compliance Best Practices
To stay compliant with Rhode Island wage laws –
- Regularly review DLT updates on wage changes.
- Differentiate tipped and untipped employees in payroll systems.
- Conduct regular payroll audits to identify discrepancies.
- Train managers and supervisors on wage regulations.
- Ensure proper documentation for exempt workers and special cases.
Tools like Factorial HR software can streamline payroll management, track overtime, and guarantee wage compliance, reducing administrative stress for business owners.
Future Outlook
Rhode Island’s minimum wage will continue rising over the next few years, reaching $17/hour by 2027 and potentially $20/hour by 2028. While some businesses worry about increased labor costs, supporters argue the benefits outweigh challenges –
- Workers gain purchasing power to meet basic needs.
- Local economies receive a boost from increased consumer spending.
- Employee retention improves, reducing turnover costs for employers.
Both workers and employers must adapt to these changes, ensuring fair pay while maintaining economic stability.
Rhode Island’s Plan to Lift Minimum Pay
Rhode Island’s progressive minimum wage policy underscores the state’s commitment to fair pay and workforce protection. By staying informed, understanding exceptions, and planning ahead, businesses can comply with regulations while supporting a thriving, well-compensated workforce. For employees, these increases ensure that hard work is rewarded with a livable, competitive wage.
