Payroll in Rhode Island: What Every Employer Needs to Know

Rhode Island, like many states in the US, has its own unique payroll requirements. This article highlights some of these rules and regulations for salaried workers to help employers navigate this area.

Payroll processing in Rhode Island is a very simple procedure. The majority of the restrictions are straightforward and adhere to federal requirements. To guarantee state payroll compliance, however, various unique labor law restrictions, such as the minimum wage (which is greater than the federal rate) and employer tax funds, must be considered. Using the steps in our instructions below, you’ll be guaranteed to process payroll properly in Rhode Island.

How to Run Payroll in Rhode Island: Step-by-Step Instructions

Step 1:

Register your company as an employer. You must apply for a federal employer identification number (EIN) and create an account in the Electronic Federal Tax Payment System on the federal level (EFTPS).

Step 2:

Get your company registered in Rhode Island. The RI Division of Taxation’s Combined Online Registration Service allows you to register for both income withholding and Unemployment Insurance Contribution accounts online. During the online registration procedure, you will be given a withholding account ID and a withholding deposit schedule. Three to five days after enrolling, you will get your RI Employer Unemployment number in the mail.

Step 3:

Create a payroll system. Whether you perform your own payroll or utilize payroll software, you’ll need to figure out a payroll procedure that is both legal in Rhode Island and efficient for your company. This involves determining when and how you will pay workers, how you will collect and submit Forms for Payroll as needed, and how and when you will verify employee hours worked, among other things.

Step 4:

Collect employee payroll paperwork. During the onboarding process, it’s important to gather employment paperwork from new recruits. The W-4, I-9, and direct deposit permission forms are all federal Forms for Payroll. Unlike several states, Rhode Island requires workers to complete supplemental paperwork called the RI W-4 for state withholding.

Step 5:

Collect, evaluate, and approve timesheets. Make sure you do this a few days before payday since Rhode Island law requires businesses to set up a regular payday within nine days of the conclusion of the payment period. If you don’t have a time and attendance system in place, use one of our free timesheet templates to get started.

Step 6:

Work out your payroll and pay your staff. There are many methods for calculating payroll, and you must choose the one that is ideal for your company.

Step 7:

Submit your payroll taxes to the government. EFTPS is required for federal tax payments. In general, you must deposit federal income tax withheld, as well as employer and employee Social Security and Medicare taxes, according to the IRS’s timetable for your firm. You may be assigned to one of the following depositing schedules by the IRS:

• Monthly Depositor: This option requires you to deposit employment taxes on payments received throughout the month by the 15th of the following month.
• Semiweekly Depositor: Requires you to deposit employment taxes by the following Wednesday for payments made on Wednesday, Thursday, and/or Friday. Taxes paid on Saturday, Sunday, Monday, and/or Tuesday must be deposited by the following Friday.

It’s vital to remember that the deposit and reporting of taxes follow different schedules. Employers that deposit both monthly and semiweekly should only file Form 941 or Form 944 quarterly or yearly to report their taxes.

Step 8:

Submit your payroll taxes to the Rhode Island Department of Revenue. All state tax payments must be paid to the Division of Taxation in Rhode Island. Depending on how much has been withheld, all filings and payments are due at the same time on a weekly, monthly, or quarterly basis.

Step 9:

Keep track of your payroll data by documenting and archiving them. It’s critical to retain records for all of your workers for at least three to four years, even if they’ve been fired. More information about keeping payroll records may be found in this article.

Step 10:

Finish your payroll reports for the year. W-2s must be completed for all employees, and 1099s must be completed for all independent contractors. By January 31 of the following year, both employees and contractors must have received these papers.

Rhode Island Payroll Law, Taxes & Regulations

When it comes to payroll regulations and taxes, Rhode Island isn’t the most convoluted, but it’s also not the most straightforward. While you won’t have to worry about local taxes, pay close attention to pay frequency requirements and employer-sponsored programs to ensure that your payroll is in order. These are a selection of the most unusual laws and regulations.

Payroll Taxes in Rhode Island

In addition to Social Security (6.2 percent of each employee’s pay), Medicare (1.45 percent of each employee’s pay), and unemployment taxes (6 percent of the first $7,000 of each employee’s pay for federal unemployment), all Rhode Island employers are responsible for paying payroll taxes for each of their employees.

You’ll have to pay Social Security and Medicare contributions from your company bank account (in addition to withholding the proper amounts from employee paychecks, which will total the amount you owe); unemployment is entirely your responsibility.

Rhode Island has no municipal or city taxes, making the procedure of submitting payroll taxes easier than in other states.

Income Taxes in the State

Rhode Island has three different Income Taxes in the State brackets, with the lowest income earners paying the lowest rates. For the 2021 tax year, the tax rate income tax rates are:

• The first $66,200 in taxable income is taxed at 3.75 percent.
• On taxable income between $66,200 and $150,550, the rate is 4.75 percent.
• For over $150,550 in taxable income, the rate is 5.99 percent.

Employers are required to withhold state withholding and remit it on behalf of their employees. According to the following schedules, filings are required:

• Weekly: If an employer withholds $600 or more in a calendar month, the withheld taxes must be reported and remitted on a weekly basis. Payments are due the next banking day after the week’s conclusion (generally Monday, unless Monday is a holiday). A return for the period is not necessary if no tax was withheld in a given week.

• Employers must report and remit taxes on a monthly basis if they withhold $50 or more but less than $600 in any calendar month.
  • If the month does not conclude in a quarter, the payment must be accompanied by Form 941M. The return, as well as the payment, are both required.
  • Form RI-941 should be used to submit returns for the months of March, June, September, and December on or before the last day of the following month.

If withholding is more than $200 but less than $600 for monthly deposits, all files and payments must be done via Online Wage Tax Filing. If your withholding is more than $50 but less than $200, you don’t have to file and pay online.

• Quarterly: If an employer withholds less than $50 each calendar month, the employer is required to remit taxes quarterly. The payment must be accompanied by Form RI-941. The return and payment must be submitted on or before the last day of the month after the quarter’s end.

Online filings and payments are not needed for quarterly deposits.

Unemployment Insurance Contribution

In Rhode Island, there is a state-run Employment Security (UI) fund that pays benefits to unemployed employees. Employer contributions are only used to provide unemployment benefits to jobless employees in Rhode Island. Businesses are responsible for the first $24,600 earned by each employee in a calendar year ($26,100 for employers with a 9.59 or higher experience rate).

At the end of December, a contribution tax rate is calculated and delivered to each employer for the next year. When you pay wages in Rhode Island for the first time, you are designated a “new employer” and will be charged a contribution rate of 0.95 percent.

Aside from the Employment Security fund, there is also a Job Development fund, which is entirely supported by employer payments.

Tax on the Job Development Fund

Firms contribute 0.21 percent of each employee’s first $24,600 in a calendar year ($26,100 for employers with a 9.19 or higher experience rate) to the Rhode Island Human Resource Investment Council (HRIS). The HRIC aids Rhode Island companies by sponsoring a variety of programs aimed at improving and upgrading the current workforce’s capabilities.

To guarantee that this scheme does not result in a tax rise, each employer’s Employment Security tax rate is cut by 0.21 percent each year.

Tip: When you pay state unemployment taxes, you may qualify for up to a 5.4% discount on your federal Unemployment Insurance Contributions. This can significantly reduce what you pay to the IRS from 6% to 0.6%.

Insurance for Workers’ Compensation

Insurance for Workers’ Compensation covers medical bills, rehabilitation costs, and lost wages for employees who get injured or experience a work-related illness. Coverage is mandatory under the Workers’ Compensation Act for most employers with one or more employees in Rhode Island law. Individual owners and partners are exempt.

Employers should obtain coverage through their own private insurance broker. In Rhode Island, Beacon Mutual Insurance Company, which is the administrator of Rhode Island’s insurance pool, is the carrier of last resort. This means that if an employer is unable to obtain Insurance for Workers’ Compensation from another carrier, Beacon Mutual should provide the coverage.

In the workplace, the state-mandated poster identifying the employer’s insurance company or adjusting business must be shown. Employers get this poster from their insurance carrier.

Employers that do not comply with the state’s standards for workers’ compensation coverage face severe fines in Rhode Island. The following are some of the penalties:

• A $250 charge is imposed on an employer who fails to display the workers’ compensation poster.
• An employer failing to provide the required Insurance for Workers’ Compensation may be fined $1,000 per day for each day without Insurance for Workers’ Compensation. An employer may also be subject to a felony charge, and upon conviction, face a $10,000 fine and two years in prison.
• A business operating without the required Insurance for Workers’ Compensation may be closed.

Minimum Wage in Rhode Island

The minimum wage in Rhode Island is $11.50 per hour as of October 2020.

The minimum pay for tipped workers in Rhode Island is $3.89. When tipped wages are coupled with tips received, the employer must pay the difference if workers are not paid the statutory minimum wage.

Minimum Wage Exemptions:

1. 90 percent of relevant minimum pay for full-time students under the age of 19 who work in nonprofit religious, educational, library, or community service organizations.
2. For any week in which a 14- or 15-year-old works more than 24 hours, the higher applicable minimum rate must be paid for all hours worked in that week; for any week in which a 14- or 15-year-old works more than 24 hours, the higher applicable minimum rate must be paid for all hours worked in that week.
3. Workers in domestic service in or around a private home; federal service; volunteer service in educational, charitable, religious, or nonprofit organizations where there are no employer/employee relationships; newspaper carriers on home delivery; shoe shiners; caddies on golf courses; ushers in theaters; traveling or outside sales occupations: no specific regulations.

Overtime Regulations in Rhode Island

Unless an employee is otherwise exempt, Rhode Island labor regulations compel an employer to pay 1.5 times the employee’s ordinary rate of pay for any hours worked in excess of 40 in a workweek.

Overtime Exemptions:

1. Any summer camp employee who works for less than six months of the year.
2. Officers of the law, firemen, and rescue workers
3. Employees of the state or state political subdivisions
4. Employees in the executive, administrative, and professional ranks
5. Drivers, technicians, and transporters
6. Salespeople, parts people, and mechanics who work mainly in sales
7. Employees in the agricultural industry

Employees in Rhode Island are paid in a variety of ways.

While there are several methods for paying workers, Rhode Island Wage and Hour Laws provide that an employer must pay wages in one of the following ways:

Payroll cards might be a terrific solution for workers who do not have access to a bank account.

Pay Stub Laws in Rhode Island

Employers in Rhode Island are required to send pay stubs to their workers on a regular basis. These pay stubs must contain the following information:

• A declaration of the employee’s hours worked during the corresponding pay period.
• A list of all deductions taken from that employee’s gross salary for the pay period (along with an explanation/reason for any unusual deductions).

Employers are permitted to deliver these statements online, but they must be able to provide a printed or handwritten copy to all workers at no cost if they request one.

While the only statutory pay stub requirements in Rhode Island are hours worked and deductions, we strongly suggest that you include all key payment information as a best practice. When making cash payments, this is very critical. For more information, see our post on free pay stub templates.

Minimum Pay Period

Rhode Island, like many other states, has laws for companies that dictate how often their workers must be paid for finished labor. All workers with fixed remuneration (salaried employees) may be paid biweekly or semimonthly, according to Rhode Island’s Guide to Wage and Workplace Laws, as long as they are paid at least twice a month.

Employees who are paid on an hourly basis or who do not have a set salary should be paid weekly. There are a few exceptions to this rule, including the following:

1. Employees of the state or political subdivisions
2. Corporations that are religious, literary, or charitable

On written request, the Rhode Island Department of Labor and Training may allow a business to pay workers less often than weekly if:

1. It pays more than 200 percent of the state minimum wage on average.
2. The employer guarantees that workers are paid on a regular basis—at least twice a month.
3. The employer furnishes documentation of a surety bond or other adequate proof of security in the amount of the previous year’s greatest biweekly payroll exposure.

Any changes to a planned payday must be communicated to all workers at least three paydays ahead of time.

Deductions from your paycheck

Employers in Rhode Island are not authorized to make any deductions from their workers’ pay without their approval, with the exception of federal, state, and FICA taxes. However, there is a list of deductions that may be made with the employee’s written permission. These are some of the deductions:

• Dues to the union
• Health insurance, pension plan deductions, welfare, and life annuities are all examples of expenses.
• Legal services that are paid for in advance
• A loan secured by future earnings or salaries (if there is a statement)

It’s crucial to remember that deductions for damage to an employer’s property or unpaid rent are never permitted.

Severance pay

If your workers are dismissed or leave willingly, you are not required to give them severance compensation as a Rhode Island employer.

Only a documented written agreement between an organization and an employee will compel you to provide severance payments to your workers under Rhode Island law.

Laws Regarding Final Paychecks

In Rhode Island, any outstanding wages or compensation due to a dismissed employee must be paid on the next normal paycheck and at the customary payment location (direct deposit, pay card, etc.).

For company owners, terminating an employee may be a painful procedure that begins with informing them of their termination.

PTO Payouts That Have Been Earned

In Rhode Island, if an employee has worked for a company for at least one year, any unused vacation money must be converted to wages and paid in whole or prorated with all other due earnings on the employee’s next normal paycheck.

It’s critical to have a dependable mechanism to manage balances since Rhode Island mandates PTO payments for workers who have worked for more than a year.

HR Laws in Rhode Island That Affect Payroll

Although Rhode Island has a number of HR regulations, many of them are aligned with federal labor rules. It’ll be critical to pay special attention to mandatory lunch breaks and permitted occupations for minors in the workforce while processing payroll in Rhode Island.

New Hire Reporting in Rhode Island

Rhode Island requires that newly hired employees must be reported within 14 days of their hire date. This includes all full-time, part-time, and temporary employees. Employers can report all new hires online via the New Hire Reporting in Rhode Island Directory.

Employers are required to report rehires or employees who return to work after being laid off, furloughed, separated, granted a leave without pay, or terminated from employment after 60 days, as well as recalled employees—anyone who remains on the payroll during a break in service or pay and then returns to work, such as teachers, substitutes, and seasonal workers.

Breaks for Meals

Breaks for Meals are not required by federal law, but they are mandatory for Rhode Island employees. A 20-minute meal period must be given during a six-hour shift, and a 30-minute meal period must be given during an eight-hour shift. These breaks do not need to be paid.

Employers are only required to provide these mandated Breaks for Meals if they have at least five employees. In addition, employers need not provide a meal break if they have fewer than three employees working on a given shift.

Sick Leave with Pay

Employees in Rhode Island have the right to take time off work to care for themselves if they are ill, injured, or have a regular medical visit under the Healthy and Safe Families and Workplaces Act. They may also make use of paid time off to cope with the effects of domestic violence, sexual assault, or stalking. Earned leave may be utilized to help their kid, spouse, domestic partner, or any household member with the same needs.

If your company has 18 or more workers, you must provide paid sick and safe leave. Employers with less than 18 workers are required to give sick and safe leave, even if it is not compensated.

In a calendar year, employees may accumulate up to 40 hours to utilize as they see appropriate. Only in exceptional situations may you request paperwork from workers to utilize this time off. Employers have the right to request a doctor’s note if an employee misses more than three workdays in a row, for example. You are not, however, permitted to inquire about disease or specifics of domestic violence.

Laws Concerning Child Labor

The Rhode Island Department of Labor and Training (DLT) maintains a list of approved occupations for adolescents seeking employment in the state. Office and secretarial labor, cashiering, bagging and carrying out orders, delivery work, and culinary work are among the authorized occupations.

It includes a list of acceptable employment as well as a list of forbidden occupations that kids are not permitted to participate in under any circumstances. Manufacturing and mining jobs, coal mining, and roofing activities are among the forbidden vocations.

Check out the website’s labor standards page for a complete list of all allowed and forbidden vocations.

The DLT also establishes guidelines for how much work a kid may do and how long they are permitted to work.

Forms for Payroll

Rhode Island has its own form for Income Taxes in the State withholding, as well as other withholding forms. Here are some of the important forms you will want to make sure you have on hand when processing payroll in Rhode Island.

State of Rhode Island Forms

Rhode Island requires that you have all employees complete a federal W-4 form to determine what their federal withholding is. In addition, you will also need to have all employees complete an RI W-4, Rhode Island’s withholding form for Income Taxes in the State.

Employers should be aware of the following withholding forms in addition to the state withholding form:

• RI-W3: Wage and Tax Statements Transmittal
• 941M: Monthly Withholding Return for the months of January, February, April, May, July, August, October, and November, utilized by monthly depositors.
• Employer’s Quarterly Tax Return and Reconciliation (RI-941), which is utilized by quarterly and monthly filers for quarter-ending months (March, June, September, and December)
• 941Q: Quarterly Withholding Return, for periods ending before December 31, 2019.

Federal Forms for Payroll

• Form W-4: Used by businesses to figure out how much tax to withhold from employees’ paychecks.
• Form W-2: This form is used to record total yearly earnings (one per employee)
• To submit total salaries and taxes to the IRS for all workers, use Form W-3 (summary of W-2s)
• Form 940 is used to submit and compute unpaid unemployment taxes to the Internal Revenue Service (IRS).
• To submit quarterly income and FICA taxes deducted from paychecks, use Form 941.
• To report yearly income and FICA taxes deducted from paychecks, use Form 944.
• Form 1099-MISC is used to report non-employee compensation and assist the IRS in collecting taxes on contract labor.

Rhode Island Payroll Resources & Sources

• Employers may access information about unemployment insurance, paid sick and safe leave, and even advertise job opportunities at the Rhode Island Department of Labor and Training.
• Employers that do not use a payroll provider or submit by mail should go to the Rhode Island Division of Tax – Employer Tax Section website to file and report all payroll taxes. There is also an employer tax guide and a wealth of information on the employer funds that may be consulted if you have any issues.
• The Rhode Island Department of Labor and Training Workforce Regulation and Safety Division produced A Guide to Wage and Workplace Laws in Rhode Island. It provides a comprehensive reference to all Rhode Island labor law rules, including child labor, lunchtimes, payroll record requirements, and more.
• New Hire Reporting in Rhode Island Directory: This is an online service that allows employers to log in and easily report all new hires and rehired employees.

Also, check with your payroll software or provider for state-specific features and resources.

Conclusion

Payroll processing in Rhode Island is a straightforward procedure. When calculating payroll, keep in mind the increased minimum wage and particular tax rates. However, most of the restrictions are in line with federal norms, so you won’t have to worry about laws clashing.

Frequently Asked Questions

What information do employers need for payroll?

Employers want to know the hours worked and gross pay for each employee. They also need information about any taxes withheld, tips earned, or other deductions that have been taken from an employee’s paycheck.

How do I set up payroll in RI?

To set up payroll in Rhode Island, you will need to contact the RI Depart. of Revenue and they can help with setting up your payroll.