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September 17, 2025
The Rhode Island Department of Labor and Training issued a new regulation (260-RICR-30-05-2) – effective August 17, 2025 – that defines “retail business” for purposes of calculating overtime pay and Sunday and holiday premium pay for non-exempt employees.
Background: Non-exempt employees in Rhode Island earn overtime pay (1.5 times regular rate) for all hours worked after 40 hours in a week. Additionally, employees are paid 1.5 times their regular rate when they work on Sundays or holidays. However, the hours worked by an “employee of a retail business…on a Sunday or a holiday, or both, shall be excluded from the calculation of overtime pay.” R.I.G.L. § 28-12-4.1(b) (emphasis added). For example, an employee of a retail business who works 50 hours in a week, including a 10-hour shift on a holiday, would be entitled to only 10 hours of time-and-a-half pay, covering the holiday premium. An employee of a non-retail business under the same circumstances (50 hours worked in a week, 10 of which were on a holiday) would be entitled to 20 hours of time-and-a-half pay—10 hours of overtime and 10 hours worked on the holiday.
Until now, confusion has existed in the Ocean State concerning this rule because the legislature did not define “retail business.”
New Regulation: Effective August 17, 2025, Rhode Island has defined “retail business” to mean: (1) an establishment engaged primarily in the sale of goods or services directly to the general public; (2) operating at the end of the distribution chain, selling in small quantities to the ultimate consumer in a manner consistent with other consumer goods and services; and (3) not engaged primarily in resale, wholesale transactions, or manufacturing but instead provides products or services recognized as retail within the particular industry.
The definition of “retail business” excludes: (1) businesses that primarily prepare and sell food for immediate consumption; and (2) wholesale operations that serve other businesses rather than individual consumers.
Takeaway: Rhode Island employers should review their overtime and Sunday/holiday premium pay obligations and evaluate whether they are “retail businesses” under the new regulation issued by the Rhode Island Department of Labor and Training.
The author of this article, Benjamin S. Levine, is a member of the Bar of Pennsylvania and New Jersey. This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice in Pennsylvania, New Jersey, Rhode Island, or any other jurisdiction, nor does it establish an attorney-client relationship with any reader of the article where one does not exist. Always consult an attorney with specific legal issues.
