The Rhode Island General Assembly adjourned sine die on Friday, bringing the 2024 legislative session to a close. Below is an overview of noteworthy legislation passed during the session.
Budget – 2025 Fiscal Year
With the COVID-19 pandemic in the rearview, the $13.963 billion budget (H 7225 Sub A) reflects the end of federal pandemic aid, totaling $60 million less than the current fiscal year. The budget also reflects Governor Dan McKee’s commitment to education, increasing education funding by $73 million over last year.
The budget directs additional funding for public bus routes and cost-of-living adjustments for public retirees, raises Medicaid reimbursement rates, and includes a $120 million affordable housing bond. The budget also allocates $83.6 million for the state match for federal funds for the reconstruction of the Washington Bridge, and $2.6 million to businesses impacted by the bridge closure.
Businesses and Employers
Arbitration Provisions and Agreements. The General Assembly passed legislation (S 2671 / H 7952) that includes various amendments to the arbitration statute, R.I. Gen. Laws § 10-3-2. Among other things, the legislation: (1) adds requirements for providing notice of intention to arbitrate; (2) allows multiple parties seeking arbitration against the same party to bring proceedings in any court and county where any of the parties seeking arbitration resides or does business; (3) guarantees parties the right to be represented by an attorney in arbitration and prohibits any agreement that discriminates against or penalizes a party for retaining counsel; (4) mandates that, in employment or consumer arbitration, unless otherwise specified, the drafting party must pay certain fees and costs before arbitration can proceed and failure to do so within 30 days results in a waiver of the right to compel arbitration; and (5) allows courts to impose various sanctions on drafting parties that breach arbitration agreements.
Businesses and employers that use arbitration provisions should review and update existing form contracts to ensure compliance with these changes.
Payment of Wages. The General Assembly passed legislation (S 2021 / H 7532) that removes the minimum wage exemption for domestic workers in the Rhode Island Payment of Wages Act. Previously domestic workers were not considered “employees” under the RIPWA and thus were only guaranteed the federal minimum wage of $7.25 per hour. With this change in the law, domestic workers may be entitled to the protections provided to employees under the RIPWA.
Employee Health Care Benefits. The General Assembly passed a bill (S 2901 Sub B / H 7795 Sub B) that protects employees’ rights to health care benefits by prohibiting contractors and subcontractors from paying employees the cash equivalent of any applicable health care benefit in lieu of actually purchasing the health care benefit. Contractors and subcontractors should take note of this change in the law and adjust accordingly, as violations will subject them to civil fines.
Manufacture and Sale of Goods. The General Assembly passed the Consumer PFAS Ban Act of 2024 (S 2152 Sub A / H 7356 Sub A), which bans the intentional addition of Per- and Polyfluoroalkyl Substances (PFAS) to consumer products sold or manufactured in Rhode Island by January 1, 2027, and would ban all uses of almost all PFAS by Dec. 31, 2032. The General Assembly also updated the Toxic Packaging Reduction Act (S 2850 Sub B / H 7619 Sub A) by delaying the ban on PFAS in food packaging until January 1, 2025, and in processing agents until July 1, 2027.
Uniform Commercial Code. The General Assembly passed a bill (S 2781 / H 7210 Sub A) amending the Rhode Island Uniform Commercial Code for emerging technologies. The 112-page bill contains extensive changes to numerous sections of the UCC.
Financial Institutions
Corporate Tax Structure. The General Assembly passed legislation (S 3152 Sub A / H 7927 Sub A) allowing financial institutions to elect a single sales factor apportionment methodology for calculating corporate income tax. Rhode Island currently uses a three-factor apportionment for financial institutions, a method that determines tax based on a company’s property, payroll and sales. Beginning January 2025, Rhode Island will shift to the single sales factor methodology, which will bring the state in line with others in the region.
The General Assembly updated the banking statutes and Home Loan Protection Act in the Rhode Island General Laws (S 2803 / H 7282) as follows:
- Minimum Capital Requirements. The bill amends R.I. Gen. Laws § 19-14-5 to adjust minimum capital requirements for financial services providers and remove the inclusion of virtual currency in net worth calculations.[1]
- Currency Transmission. The bill repeals R.I. Gen. Laws § 19-14.3-2, which allowed securities in lieu of bonds, and introduces requirements for maintaining permissible investments, particularly for currency transmission, including cryptocurrencies, and may include holding specific types of investments or the maintenance of certain liquidity levels.
- Home Loan Protection Act. The bill amends the Rhode Island Home Loan Protection Act, R.I. Gen. Laws § 34-25.2-11, clarifying the exemption scope for certain national and federal institutions and state housing finance agencies from the Rhode Island Home Loan Protection Act.
Zoning
The General Assembly passed legislation (S 2998 Sub A / H 7062 Sub A) that allows Rhode Islanders to develop accessory dwelling units (ADUs)—also known as in-law apartments or granny flats—on their owner-occupied property to accommodate a disabled family member, or within the existing footprint of their structures or on any lot larger than 20,000 square feet, provided that the ADU’s design satisfies building code, size limits, and infrastructure requirements. Property owners are prohibited from using ADUs as short-term rentals.[2]
Real Estate
Shoreline access has been a hot topic in Rhode Island over the last few years. During the 2023 legislative session, the General Assembly extended the rights enjoyed by the public along Rhode Island’s shoreline. Litigation challenging the constitutionality of the 2023 shoreline access law is ongoing. Notwithstanding the uncertain fate of the 2023 law, the General Assembly passed legislation during the 2024 session (S 2185 Sub A / H 7376 Sub A) that requires sellers of vacant land and real property along the coastline to include in real estate sales disclosures information related to the public’s rights along the shoreline and any known public rights of way across with the property. Buyers must provide written acknowledgement that they have been informed of the public’s rights and privileges of the shore.
Landlord/Tenant
The General Assembly passed two bills during the 2024 session amending various provisions in the Residential Landlord Tenant Act. The first bill (S 2189 Sub A / H 7304 Sub A) requires landlords give residential tenants 90 days’ notice of any rent increase and 120 days’ notice if the tenant is over age 62. The second bill (S 2643 Sub A / H 7647 Sub A) requires landlords to list all mandatory fees when advertising any residential property for rent in the same section of the agreement as the rent disclosure. Businesses and individuals involved in residential property rentals should be aware of these changes in order to ensure compliance with the Act.
Conclusion
As with any new legislation, it is important to review longstanding policies to ensure compliance with new laws and to best position yourself and your business for success. Readers are encouraged to contact Stephen Lapatin at slapatin@apslaw.com or 401.427.6223 for a more detailed discussion or review of the 2024 legislative session.
[1] Financial institutions must now maintain a “tangible net worth” of the greater of $100,000 or 3% of total assets for the first $100 million, 2% of additional assets for $100 million to $1 billion, and .5% of additional assets for over $1 billion. The legislation defines “tangible net worth” as “the aggregate assets of a licensee excluding all intangible assets, less liabilities, as determined in accordance with United States generally accepted 30 accounting principles.”
[2] The bill stems from House Speaker K. Joseph Shekarchi’s goal to address the housing issue in Rhode Island and is intended to encourage the development of rental units and to provide property owners with the opportunity to generate additional income.
