This article continues Kenney & Sams’ series addressing Rhode Island employment laws that impact our Massachusetts and Rhode Island clients. Awareness of these developments is particularly important for our Massachusetts-based clients who may not always consider the implications of Rhode Island law on their operations. As 2024 ends and 2025 begins, we highlight a few of the new or amended Rhode Island employment laws that will impact clients’ operations. This is not an exhaustive list, and you should continue to maintain your own awareness of laws that impact you.
Provision of Health Care Benefits (not just cash equivalent) to Employees on Prevailing Wage Projects
General contractor and subcontractor employers may no longer compensate employees on prevailing wage projects with the equivalent cash value of any applicable healthcare benefit. Instead, R.I. Gen. Laws, § 37-13-7 requires employers to “actually purchase the healthcare benefit for the employee.” In other words, employers must provide health care benefits to most employees on prevailing wage projects. The statute makes two exceptions for:
- employees receiving healthcare benefits on their spouse’s, domestic partner’s, or parent’s healthcare plan or through a military healthcare plan; and
- employees employed for a period of 90 days or less
The Rhode Island General Assembly enacted this law on June 10, 2024 and quietly introduced a July 1 effective date. The law leaves many questions, in particular: what is an employer’s obligation if an employee who does not fall within one of the exceptions simply refuses to accept healthcare insurance? For now, employers should inform their employees of these rights and obtain and maintain written waivers of healthcare benefits from employees who refuse to participate. Employers should also maintain clear records of employees who fall within the statutory exemptions to address concerns that may arise during government audits. Failure to comply with this law carries penalties between $1,000 and $3,500 per violation and liability for failure to pay wages in private actions brought by aggrieved employees.
Expansion of Temporary Caregiver Leave as of January 1, 2025
Rhode Island currently permits qualified employees to take six (6) weeks of paid leave to care for a seriously ill family member to care for / bond with a newborn, adopted, or fostered child. Effective January 1, 2025, the leave allotment increases to seven (7) weeks, with a further increase to eight (8) weeks on January 1, 2026.
This expansion increases a trend in providing additional job-protected leave benefits to employees in Rhode Island. Not only will the leave allotments likely continue to increase to mirror Massachusetts and Connecticut law, but we anticipate the qualifying reasons for temporary caregiver leave will also expand in the near future. Employers should consistently evaluate their workforce management procedures to be prepared for these changes.
Substantial Revisions to the Rhode Island Arbitration Act
Many employers include arbitration provisions in their employment agreements as a way to reduce costs and to expedite the resolution of employment-related disputes. The Rhode Island General Assembly recently amended the state’s arbitration act in several ways that now place increased burden on employers:
- If employers receive an arbitration demand, they now have 20 days to file a court proceeding to stop the arbitration proceedings. Although employers typically favor arbitration, this new law is important because if an employer who wants to stop arbitration fails to comply with the 20-day requirement, the employer waives:
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- all defenses that the employee failed to comply with the procedural requirements of the agreement; and
- defenses that the employee may have violated the “statute” of limitations period set forth in the agreement
- Employers must “timely” pay their arbitration fees and costs. The law requires the employer to make the initial arbitration payments within 30 days of the due date. This sounds straightforward, but as it stands under this law, if an employer is even one day late with payment or if payment was delayed by mistake, the employer:
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- waives the right compel arbitration;
- faces the risk that the employee will transfer the dispute to a court;
- faces liability for the employee’s attorneys’ fees and costs “related to the arbitration” (if the employee keeps the dispute in arbitration); and/or
- risks additional sanctions such as loss of discovery, striking of pleadings, default judgment, contempt orders
These amendments apply equally to consumer arbitration agreements, which are frequently included in residential construction contracts. Employers and contractors who rely upon residential construction arbitration agreements should review their arbitration agreements and train employees on expectations when enforcing those agreements.
Increase in Minimum Wage and Overtime Thresholds– Effective January 1, 2025
Effective January 1, 2025, employers must pay hourly employees at least $15.00 per hour. Further, Rhode Island minimum wage / overtime laws will apply to “domestic workers” (e.g., nannies, au pairs, etc.).
Rhode Island employers, like employers across the country, will also need to update their overtime policies and manage their budgets as the salary threshold for overtime exemption increases to $58,566 per year ($1,128 per week).
Additional Reporting Requirements for Independent Contractors
Under Rhode Island law, independent contractors must file “notices of designation” of their independent contractor status with the Department of Labor and Training. As of January 1, 2025, the following amendments go into effect:
- Independent contractors must file the “notices of designation” annually – even if they have ongoing relationships with hiring entities;
- Independent contractors must file the “notice of designation” for each hiring entity that retains their services – as opposed to filing one notice that covers all work the independent contractor may perform
These amendments may seem minor but they provide employers who hire independent contractors with a golden opportunity to collect evidence to support their classification decision (independent contractor vs. employee). The “notices of designation” are public records. Therefore, employers should consider making public records requests to obtain notices of each independent contractor they retain. This way, if an independent contractor has multiple hiring entities, employers may have evidence to defend themselves against a critical element of a misclassification case, namely that the independent contractor was financially dependent upon the employer.
Moving Forward
Again, this list of new laws and amendments is not exhaustive. We hope that this information assists your teams as they manage their Rhode Island workforce. Employers with employees in Rhode Island should regularly review and update their policies to ensure compliance with Rhode Island laws and to ensure that those employees receive timely notice of their rights. Failure to notify employees of their rights and/or to comply with Rhode Island employment laws can result, in certain circumstances, not only in actual damages, but can also make employers liable for double damages and attorneys’ fees
Employers with questions should consult with a Kenney & Sams employment attorney.
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