S 2323Worker Benefits

Labor and Labor Relations - The Commuter Transportation Benefits Act

Requires Rhode Island employers with over 500 workers to offer pre-tax payroll deductions for public transit passes.

Held for study

Population
Affected

Introduced Jan 23, 2026Committee Senate Labor & Gaming

Plain-English Summary

This legislation mandates that "covered employers" in Rhode Island—defined as those with 500 or more employees—must offer a pre-tax transportation fringe benefit program. This program allows employees to use pre-tax income to pay for commuting costs, specifically transit passes for the Rhode Island Public Transit Authority (RIPTA) or other commuter highway vehicles, in accordance with federal tax codes. The bill exempts federal, state, and local government entities, as well as employers proving severe financial hardship. Non-compliant employers face civil penalties administered by the Department of Labor and Training.

For younger readers

This new rule is for very big companies that have 500 or more workers. It says these companies must help their workers pay for riding the bus to work. The workers can choose to take money out of their paychecks before taxes are taken out to buy bus passes. This helps the workers save money. The government and companies that are losing too much money do not have to do this. If a big company refuses to follow this rule, they will have to pay a fine.

Who & Where It Applies

Impacted groups

Large Employers (500+ employees)CommutersRhode Island Public Transit Authority (RIPTA)Department of Labor and TrainingDepartment of Transportation

Impacted communities

All

Constitutional & Fiscal Check

None Likely

Estimated cost

None

Estimated revenue

Amount unknown

Bill Analysis

Both viewpoints

For Progressives

Promotes environmental justice and sustainability by incentivizing the use of public transportation, which can reduce traffic congestion and carbon emissions.
Provides financial relief to working-class commuters by allowing them to pay for essential travel costs with pre-tax dollars, effectively increasing their take-home pay.
Strengthens the public sector by potentially increasing ridership and support for the Rhode Island Public Transit Authority (RIPTA).
Exempts state and local government employees, denying these pre-tax savings to a significant portion of the public workforce.
Only applies to very large corporations (500+ employees), leaving employees of small and medium-sized businesses without access to these commuter benefits.
Includes a "severe financial hardship" loophole that large corporations could potentially exploit to avoid providing these benefits to their workers.

For Conservatives

Utilizes existing federal tax code provisions to lower the effective cost of living for employees without requiring state tax hikes or direct government subsidies.
Protects taxpayers by exempting state and local government entities from the administrative costs and mandates associated with the program.
Includes specific exemptions for businesses facing "severe financial hardship," acknowledging that regulations can negatively impact business viability.
Imposes a government mandate on private businesses, interfering with the free market right of employers to design their own compensation and benefit packages.
Creates additional administrative burdens and red tape for employers who must manage the payroll deductions and compliance for the program.
Empowers a state agency (Department of Labor and Training) to levy fines against private companies, expanding the size and reach of the administrative state.

Votes

Loading votes...

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.