2012 -- H 7566 SUBSTITUTE A

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LC01396/SUB A/2

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO LABOR AND LABOR RELATIONS

     Introduced By: Representatives Blazejewski, Keable, Handy, Tanzi, and Bennett

     Date Introduced: February 15, 2012

     Referred To: House Labor

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 28 of the General Laws entitled "LABOR AND LABOR

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RELATIONS" is hereby amended by adding thereto the following chapter:

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     CHAPTER 14.1

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PREVENTION OF TIPPING FRAUD

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     28-14.1-1. Legislative purpose. – The general assembly declares that the purpose of this

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chapter is to prohibit employers from demanding payment or deductions from a tip or service

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charge to waitstaff, regulate tip pools, and require that any service charge imposed by an

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employer be remitted to the service staff. No employer or person shall contract with an employee

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or by any other means exempt itself from this chapter.

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     28-14.1-2. Definitions. – Whenever used in this chapter:

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     (1) “Employer” means any person or entity engaged in any business or enterprise in this

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state that has employees in its service, including, without limitation, any appointment, contract of

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hire or apprenticeship, expressed or implied, oral or written, irrespective of whether the person is

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the owner of the business or is operating on a concessionaire or other basis, and also including,

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without limitation, any person other than the employer having the authority to hire or discharge

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any employee or supervise, direct or control the acts of employees.

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     (2) “Patron” means any person who is served by a waitstaff employee or service

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employee at any place where such employees perform work, including, but not limited to, any

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restaurant, banquet facility or other place at which prepared food and/or beverages are served, or

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any person who pays a tip or service charge to any waitstaff employee, service employee or

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service bartender.

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     (3) “Service bartender” means a person who prepares alcoholic or nonalcoholic

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beverages for patrons to be served by another employee, such as a waitstaff employee.

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     (4) “Service charge” means a fee charged by an employer to a patron in lieu of a tip to

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any waitstaff employee, service employee or service bartender, including any fee designated as a

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service charge, tip, gratuity or a fee that a patron or other consumer would reasonably expect to

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be given to a waitstaff employee, service employee or service bartender in lieu of, or in addition

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to, a tip.

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     (5) “Service employee” means a person who works in an occupation in which employees

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customarily receive tips or gratuities, and who provides service directly to customers or

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consumers, but who works in an occupation other than in food or beverage service and who is not

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a manager.

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     (6) “Tip” means a sum of money, including any amount designated by a credit card

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patron, a gift or a gratuity, given as an acknowledgment of any service performed by a waitstaff

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employee, service employee or service bartender.

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     (7) “Waitstaff employee” means a person, including a waiter, waitress, bus person, and

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counter staff, who: (i) Serves beverages or prepared food directly to patrons or who clears

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patrons’ tables; (ii) Works in a restaurant, banquet facility or other place where prepared food or

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beverages are served; and (iii) Who is not a manager.

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     (8) "Manager" means a person who has or is delegated, from time to time, the authority to

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hire or discharge any employee.

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     28-14.1-3. Prohibition on payment or deduction from tip. – No employer or other

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person shall demand, request or accept from any waitstaff employee, service employee or service

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bartender any payment or deduction from a tip or service charge given to such waitstaff

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employee, service employee or service bartender by a patron. An employer that permits patrons to

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pay tips or service charges by credit card shall pay the employee the full amount of the tip or

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service charge that the patron indicated on the credit card slip minus no more than the prorated

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portion of the tip or service charge assessed by the credit card company and banks for processing

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the transaction, or four percent (4%) of the tip or service charge, whichever is less. No such

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employer or other person shall retain or distribute in a manner inconsistent with this chapter any

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tip or service charge given directly to the employer or person.

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     28-14.1-4. Prohibition against tip pools. – No employer or person shall cause, require

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or permit any waitstaff employee, service employee or service bartender to participate in a tip

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pool through which such employee remits any wage, tip or service charge or any portion thereof,

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for distribution to any person who is not a waitstaff employee, service employee or service

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bartender. An employer may administer a valid tip pool and may keep a record of the amounts

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received for bookkeeping or tax reporting purposes.

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     28-14.1-5. Service charges and tips. – (a) If an employer or person submits a bill,

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invoice or charge to a patron or other person that imposes a service charge or tip, the total

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proceeds of that service charge or tip shall be remitted only to the waitstaff employees, service

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employees or service bartenders in proportion to the service provided by those employees.

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     (b) Nothing in this section shall prohibit an employer from imposing on a patron any

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house or administrative fee in addition to or instead of a service charge or tip, if the employer

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provides a designation or written description of that house or administrative fee, which informs

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the patron that the fee does not represent a tip or service charge for waitstaff employees, service

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employees or service bartenders.

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     (c) Any service charge or tip remitted by a patron or person to an employer shall be paid

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to the waitstaff employee, service employee, or service bartender no later than the time set forth

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for timely payment of wages under chapter 28-14-2.2.

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     28-14.1-6. Violation and penalties. – (a) Whoever violates this chapter shall be guilty of

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a misdemeanor punishable by a fine not exceeding one thousand dollars ($1,000) or by

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imprisonment for not exceeding sixty (60) days, or both. Any person or employer who violates

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this chapter shall make restitution for any tips accepted, distributed or retained in violation of this

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chapter, together with interest thereon at the rate of twelve percent (12%) per annum.

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     (b) An employee claiming to be aggrieved under this section may, within three (3) years

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after the violation, institute and prosecute in his or her own name and on his or her own behalf, or

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for himself or herself and for others similarly situated, a civil action for injunctive relief, for any

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damages incurred and for any lost wages and other benefits. An employee so aggrieved who

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prevails in such an action shall be awarded treble damages, as liquidated damages, for any lost

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wages and other benefits and shall also be awarded the costs of the litigation and reasonable

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attorneys’ fees.

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     SECTION 2. This act shall take effect on January 1, 2013.

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LC01396/SUB A/2

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO LABOR AND LABOR RELATIONS

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     This act would prohibit employers from demanding payment or deductions from a tip or

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service charge given to waitstaff, regulate tip pools, and require that any service charge imposed

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by an employer be remitted to the service staff.

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     This act would take effect on January 1, 2013.

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LC01396/SUB A/2

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