For the second time in two years, the Rhode Island General Assembly amended the state’s prevailing wage law (R.I. Gen. Laws, § 37-13-7) and created new obligations for certain contractors and subcontractors related to fringe benefits. In 2024, the General Assembly prohibited contractors and subcontractors from making a cash equivalent payment to employees for health care benefits instead of actually purchasing the healthcare benefit for the employee. The only exceptions applied to employees who received healthcare benefits from their spouse, parent, or domestic partner or to employees employed by the contractor or subcontractor for a period of 90 days or less.
Now, effective July 1, 2025, contractors and subcontractors on prevailing wage jobs have new obligations related to retirement or qualifying pension fringe benefits. Specifically, the new law prohibits “contractors or subcontractors employed ninety (90) days or less” from making payment of the cash equivalent “of any applicable retirement or pension benefit” to the employee instead of actually purchasing the retirement and/or pension benefit for the employee. As of this article, the Rhode Island Department of Labor and Training (“DLT”) interprets this new law to prohibit “contractors who work more than 90 days on a project” from paying fringe benefits as a “cash benefit” (guidance available here [scroll to 2025 Legislative Updates]).
The new law as it pertains to retirement or pension benefits differs in three significant ways from the healthcare fringe benefit requirement:
- The 90-day calculation for retirement and pension benefits is likely based upon a contractor’s or subcontractor’s time on a job irrespective of the amount of time a particular employee is performing work for a contractor or subcontractor on that job or irrespective of how long the contractor or subcontractor employs that employee.
- Employees do not have a private right of action to sue employers who are alleged to have violated the retirement or pension benefit requirement; and
- Contractors or subcontractors are not required to provide any proof of purchase of retirement or pension benefits to the employee or to an employee’s bargaining agent.
The amendment, as enacted, leaves many unanswered questions, and we anticipate that DLT will draft and publish rules and regulations to facilitate the implementation of the law’s requirements in the near future. Outstanding compliance questions include:
- What does the law mean by “employed” for contractors or subcontractors?
- Are the 90 days based on a contractor or subcontractor’s time on the job or an employee’s length of employment with the contractor or subcontractor?
- Must the 90-days for contractors or subcontractors to be “employed” (i.e., on the job site) be consecutive days?
- For example, how does the law apply when a subcontractor is on the job site for the first 30 days of the project, is then off the project for several months, and then returns to continue their work?
- Is the subcontractor’s return considered Day 31, or has the 90-day requirement been met where construction was performed for 90+ days, but the subcontractor has not been on the job for all days?
- Does the 90-day requirement include weekends or holidays?
- Does the 90-day requirement account for time already worked on a project prior July 1, 2025 (or prior to when enforcement begins)?
- Will the obligation require contractors and subcontractors to provide retirement and/or pension benefits to employees who may only be on a job for a limited period of time?
- Will general contractors have an obligation to oversee subcontractor compliance with the requirement?
- What are the obligations of a contractor or subcontractor if an employee does not want to participate in a retirement or pension plan or if the employee already participates in separate plan?
- How will this amendment be enforced pending the new regulations?
These are only a few of the questions raised by the law, and they do not address the necessary business and operational changes that contractors and subcontractors must consider. The timeline for DLT’s rule-making process is uncertain. However, the process will likely be public, and contractors and subcontractors are encouraged to regularly check DLT’s website for updates concerning the public comment period.
Although there is uncertainty surrounding the amendment, contractors and subcontractors must be prepared to comply. Violations subject contractors and subcontractors to civil penalties between $1,000 and $3,000 per violation (which can be calculated as separate violations for each affected employee and each day of non- compliance). Therefore, contractors and subcontractors should begin to review their options for offering retirement or pension plans (if none in place already); reviewing existing plans to ensure compliance with the prevailing wage law; and updating policies and procedures related to prevailing wage compliance and communications with employees.
The legal landscape related to Rhode Island’s prevailing wage laws is rapidly evolving, and we will continue to monitor and share developments. In the meantime, contractors and subcontractors with questions are encouraged to contact construction and employment attorneys at Kenney & Sams.