The Rhode Island Department of Labor and Training (DLT) has released guidance in the form of Frequently Asked Questions that clarify the definition of a retail employer.

The Details

By way of background, state law requires non-exempt employees to be paid one and a half times their regular rate of pay for hours worked over 40 in a week, and for work on Sundays and certain holidays. Non-retailer employers must account for Sunday/holiday time separately and pay time and half for all hours worked during those times. However, for retail employers, the hours worked on Sundays and/or holidays are excluded when calculating weekly overtime pay, providing an advantage to employers who are classified as retailers.

Previously, Rhode Island had not issued a formal definition for a retail employer.

Example of retailer/non-retailer premium pay requirements

If an employee works 50 hours per week (eight of which are on Sunday), the breakdown of pay under the law could look as follows:

Non Retailer

·      32 hours at straight-time,

·      8 hours at time-and-a-half for Sunday work, and

·      10 hours at time-and-a-half for hours worked over 40.

Retailer

·      40 hours at straight-time, and

·      10 hours at time-and-a-half, covering both the Sunday work and the overtime.

Essentially, a retail business employer could count the Sunday/holiday premium toward overtime pay, paying 40 hours of straight-time, and the 10 hours at time-and-a-half would cover the Sunday work and the overtime. Whereas the non-retailer would be required to pay 32 hours of straight-time, eight hours at time-and-a-half (for the hours worked on Sunday), and 10 hours at time-and-a-half for the hours worked over 40 (also known as stacking or pyramiding of overtime).

Retail Business Defined

The DLT updated its guidance in the form of Frequently Asked Questions, and now defines a retail business as an establishment that engages primarily in the sale of goods or services directly to the general public (operates at the end of the distribution chain and sells in small quantities to the ultimate consumer in a manner consistent with other consumer goods and services).

The following are not considered retail businesses:

• Businesses engaging primarily in resale, wholesale transactions or manufacturing;
• Businesses primarily preparing and selling food for immediate consumption; and
• Wholesale operations serving other businesses (rather than individual consumers).

Next Steps

Determine whether your business qualifies as a retail business and follow applicable Sunday and holiday premium calculations.