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H 7363Worker Benefits

Labor and Labor Relations - The Commuter Transportation Benefits Act

Large Rhode Island employers must provide programs allowing workers to use pre-tax income to pay for public transit commuting costs.

Held for study
Population
Affected
28
Email Legislator
Introduced Jan 28, 2026Committee House Labor

Plain-English Summary

This legislation, known as the "Commuter Transportation Benefits Act," mandates that large employers in Rhode Island (those with 500 or more employees) offer a pre-tax transportation benefit program to their staff. This program allows employees to use pre-tax earnings to pay for commuting costs, specifically transit passes for the Rhode Island Public Transit Authority (RIPTA), consistent with federal tax codes. The bill exempts government entities and allows exceptions for businesses proving financial hardship. Non-compliant employers face civil penalties, and the state will conduct an awareness campaign regarding these benefits.

For younger readers

This new rule is for big companies that have a lot of workers. It says these companies have to help their workers save money on their ride to work, specifically if they take the bus. The workers can take money out of their pay before taxes are taken out to buy bus tickets. This makes the tickets cheaper in the end. The rule does not apply to the government, only to businesses. If a big business refuses to do this, they might have to pay a fine.

Who & Where It Applies

Impacted groups
Large Private Employers (500+ employees)Commuting EmployeesRhode Island Public Transit Authority (RIPTA)Payroll AdministratorsDepartment of Labor and Training
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
None
Estimated revenue
Non-compliant Employers: $100 to $250 per violation

Bill Analysis

Both viewpoints
For Progressives
  • Promotes environmental justice by incentivizing public transit use, which helps reduce carbon emissions and traffic congestion, benefiting the broader community's health.
  • Provides direct financial relief to working-class commuters by allowing them to use pre-tax income for travel, effectively increasing their take-home pay and disposable income.
  • Holds large corporations accountable for the welfare of their workforce by mandating they facilitate access to essential transportation benefits.
  • Exempts state and local government employees, failing to extend these money-saving benefits to thousands of public sector workers who may struggle with commuting costs.
  • Sets a high threshold of 500 employees, excluding workers at small and medium-sized businesses who often need financial assistance the most.
  • Establishes very low financial penalties (maximum $250 per month) that large corporations may view as a negligible cost of doing business rather than a reason to comply.
For Conservatives
  • Utilizes existing federal tax code provisions to lower the effective tax burden on employees without creating a new state-funded subsidy program.
  • Includes a hardship exemption that allows businesses to opt-out if they can demonstrate that the mandate would cause severe financial difficulty.
  • Restricts the mandate to only the largest employers (500+ employees), shielding small business owners and startups from additional regulatory requirements.
  • Imposes a government mandate on private businesses, interfering with the free market right of employers to negotiate and determine their own benefits packages.
  • Creates administrative burdens and compliance costs for businesses, forcing them to manage complex pre-tax deduction programs under threat of government fines.
  • Expands the punitive power of the state by authorizing the Department of Labor and Training to levy civil penalties against private enterprises.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 51 additions

SECTION 1. Title 28 of the General Laws entitled "LABOR AND LABOR RELATIONS" is hereby amended by adding thereto the following chapter: 28-61-1. Short title. This chapter shall be known and may be cited as the "Commuter Transportation Benefits Act." 28-61-2. Definitions. As used in this chapter:

(1) "Covered employer" means an employer with five hundred (500) or more employees assigned, scheduled to work, working or situated at the employer's place of business or work site(s) located within the state.

(2) "Director" means the director of the department of labor and training.

(3) "Employee" shall have the same meaning as provided in § 28-12-2.

(4) "Employer" shall have the same meaning as provided in § 28-12-2.

(5) "Pre-tax transportation fringe benefit" means a pre-tax election transportation fringe benefit, that provides commuter highway vehicle and transit benefits, consistent with the provisions and limits of § 132(f)(1) of the Internal Revenue Code of 1986 (26 U.S.C. §132(f)(1)) at the maximum benefit levels allowable under federal law, to be deducted for those programs from an employee's gross income, pursuant to § 132(f)(2) of the Internal Revenue Code of 1986 (26 U.S.C. § 132(f)(2)).

(6) "Transit pass" means a pass for travel by bus or vehicle, operated by the Rhode Island public transit authority (RIPTA). 28-61-3. Commuter employee transportation benefit.

(a) Except as provided in subsection (b) of this section, every covered employer with five hundred (500) or more employees, shall offer employees a pre-tax transportation fringe benefit program, that provides commuter transit benefits consistent with § 132(f)(1) of the Internal Revenue Code of 1986 (26 U.S.C. § 132(f)(1)) at the maximum benefit levels allowable under federal law, to be deducted from an employee's gross income, pursuant to § 132(f)(2) of the Internal Revenue Code of 1986 (26 U.S.C. § 132(f)(2)).

(b) Subsection (a) of this section shall not apply to:

(1) The government of the United States;

(2) The State of Rhode Island including any office, department, agency, authority, institution, association, society or other body of the state;

(3) Any local government or entity;

(4) Any group of employees covered by a collective bargaining agreement in effect on January 1, 2027, until the expiration of the collective bargaining agreement; or

(5) Any employer who has demonstrated to the satisfaction of the director that the offering of such benefits would result in a severe financial hardship for the employer. 28-61-4. Rules and regulations. The director shall promulgate rules and regulations as he or she deems necessary to effectuate the provisions of this chapter. 28-61-5. Civil penalty. Any employer found to be in violation of the provisions of this chapter shall be liable for a civil penalty of not less than one hundred dollars ($100) and not more than two hundred fifty dollars ($250) for a first violation. An employer shall have ninety (90) days to offer a pre-tax transportation fringe benefit, before the civil penalty is imposed. After ninety (90) days, each additional thirty (30) day period in which an employer fails to comply with the provisions of this chapter, shall constitute a subsequent violation and a civil penalty of two hundred fifty dollars ($250) shall be imposed for each subsequent violation. No civil penalty shall be imposed on any single employer, more than once in any thirty (30) day period. 28-61-6. Public awareness campaign. The department of transportation, in conjunction with the department of labor and training, shall conduct a public awareness campaign, encouraging the public to contact employers about commuter transportation benefits.

SECTION 2. This act shall take effect on January 1, 2027.