The Rhode Island Department of Labor and Training (DLT) issued new rules that clarify what constitutes “retail businesses” regarding calculations of overtime pay requirements and premium pay for work on Sundays and holidays. The rules confirm the general understanding of the overtime and premium pay requirements but provide additional certainty for employers on which businesses are and are not considered retail.

Quick Hits

• The Rhode Island DLT has established new rules defining “retail businesses” and clarifying overtime and holiday pay calculations, emphasizing that only those selling directly to consumers qualify.
• The rules clarify that retail businesses can count Sunday and holiday hours towards overtime calculations, impacting how premium pay is administered during those periods.

Effective August 17, 2025, the DLT regulation, “Payment of Wages, Employer Exemptions from Weekly Pay, and Exemptions for Work on Holidays and Sundays,” (260-RICR-30-05-2) outlines rules and procedures related to the payment of wages, exemptions from weekly pay requirements, and exemptions from premium pay for work on Sundays and holidays.

Specifically, the rules define “retail businesses” as those that sell directly to consumers and not to other businesses. This distinction is critical for calculating overtime and Sunday and holiday pay, as retail businesses are allowed to count Sunday and holiday pay against any overtime hours worked.

Definition of Retail Business

The rules define “retail businesses” as establishments “engaged primarily in the sale of goods or services directly to the general public” and that “operate[] 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.”

The rules distinguish retail businesses from those that “engage primarily in resale, wholesale transactions, or manufacturing” and provide products or services generally recognized as retail sales. The rule explicitly excludes “businesses that primarily prepare and sell food for immediate consumption” and “wholesale operations that serve other businesses rather than individual consumers.”

Overtime Pay Requirements

Rhode Island law requires that nonexempt employees be paid one-and-a-half times their regular rate of pay for any hours worked over forty in a week, which is consistent with the federal Fair Labor Standards Act (FLSA). Additionally, employees are entitled to a premium pay equal to one-and-a-half times their rate for hours worked on Sundays and holidays.

For most employers, overtime and Sunday holiday pay hours are calculated separately, meaning employers may be required to pay employees both time-and-a-half for hours worked over forty and time-and-a-half for any hours worked on Sundays or holidays.

Retail businesses are not exempt from Sunday or holiday premium pay requirements, but they can count the Sunday and holiday hours against the overtime hours. That means an employee at a retail business who works forty-eight hours in a week, including an eight-hour shift on Sunday, would only be entitled to eight hours of time-and-a-half pay covering both the overtime and Sunday premium.

The exception is if the retail workers are covered by a collective bargaining agreement that provides premium pay for Sundays or holidays. In such cases, employers must comply with the terms of the agreement, even if they are otherwise exempt from premium pay requirements.

Next Steps

Employers in Rhode Island may want to review the new rules and determine whether they are in compliance with the state’s overtime pay obligations and whether they may be considered a retail or wholesale business. In particular, the rules confirm a general understanding of what is regarded as a retail business, which includes large “wholesale” stores that sell products directly to consumers, despite similarities to wholesalers that sell mainly to other businesses. Such businesses may continue to count Sunday or holiday hours against overtime hours when calculating overtime and premium pay.