Chapter 264
2019 -- S 0698 SUBSTITUTE A
Enacted 07/15/2019

A N   A C T

Introduced By: Senator Maryellen Goodwin
Date Introduced: March 21, 2019

It is enacted by the General Assembly as follows:
     SECTION 1. Title 28 of the General Laws entitled "LABOR AND LABOR
RELATIONS" is hereby amended by adding thereto the following chapter:
     28-58-1 28-59-1. Short title.
     This chapter shall be known and may be cited as the "Rhode Island Noncompetition
Agreement Act."
     28-58-2 28-59-2. Definitions.
     As used in this chapter:
     (1) "Business entity" means any person as defined in § 43-3-6 and includes a corporation,
business trust, estate trust, partnership, association, joint venture, government, governmental
subdivision or agency, or any other legal or commercial entity.
     (2) "Earnings" means wages or compensation paid to an employee in the first forty (40)
hours of work in a given week, not inclusive of hours paid at an overtime, Sunday, or holiday
     (3) "Employee" means an individual who works for hire, including an individual
employed in a supervisory, managerial, or confidential position, but shall not include an
independent contractor.
     (4) "Employer" means any person, business entity, partnership, individual proprietorship,
joint venture, firm, company, or other similar legal entity that employs one or more employees,
and shall include the state and its instrumentalities and political subdivisions, public corporations,
and charitable organizations.
     (5) "Forfeiture agreement" means an agreement that imposes adverse financial
consequences on a former employee as a result of the termination of an employment relationship,
regardless of whether the employee engaged in competitive activities, following cessation of the
employment relationship. Forfeiture agreements do not include forfeiture for competition
     (6) "Forfeiture for competition agreement" means an agreement that by its terms or
through the manner in which it is enforced, imposes adverse financial consequences on a former
employee as a result of the termination of an employment relationship if the employee engages in
competitive activities.
     (7) "Low-wage employee" means an employee whose average annual earnings, as
defined in § 28-58-2(2) subsection (2), are not more than two hundred fifty percent (250%) of the
federal poverty level for individuals as established by the United States Department of Health and
Human Services federal poverty guidelines.
     (8) "Noncompetition agreement" means an agreement between an employer and an
employee, or otherwise arising out of an existing or anticipated employment relationship, under
which the employee or expected employee agrees that he or she will not engage in certain
specified activities competitive with his or her employer, after the employment relationship has
ended. Noncompetition agreements include forfeiture for competition agreements, but do not
     (i) Covenants not to solicit or hire employees of the employer;
     (ii) Covenants not to solicit or transact business with customers, clients, or vendors of the
     (iii) Noncompetition agreements made in connection with the sale of a business entity or
all or substantially all of the operating assets of a business entity or partnership, or otherwise
disposing of the ownership interest of a business entity or partnership, or division or subsidiary of
any of the foregoing, when the party restricted by the noncompetition agreement is a significant
owner of, or member or partner in, the business entity who will receive significant consideration
or benefit from the sale or disposal;
     (iv) Noncompetition agreements originating outside of an employment relationship;
     (v) Forfeiture agreements;
     (vi) Nondisclosure or confidentiality agreements;
     (vii) Invention assignment agreements;
     (viii) Noncompetition agreements made in connection with the cessation of or separation
from employment if the employee is expressly granted seven (7) business days to rescind
acceptance; or
     (ix) Agreements by which an employee agrees to not reapply for employment to the same
employer after termination of the employee.
     (9) "Trade secret" means information as defined in § 6-41-1.
     28-58-3 28-59-3. Enforceability.
     (a) A noncompetition agreement shall not be enforceable against the following types of
     (1) An employee who is classified as nonexempt under the Fair Labor Standards Act, 29
U.S.C. 201-219;
     (2) Undergraduate or graduate students that who participate in an internship or otherwise
enter a short-term employment relationship with an employer, whether paid or unpaid, while
enrolled at an educational institution;
     (3) Employees age eighteen (18) or younger; or
     (4) A low-wage employee.
     (b) This section does not render void or unenforceable the remainder of a contract or
agreement containing the unenforceable noncompetition agreement, nor does it preclude the
imposition of a noncompetition restriction by a court, whether through preliminary or permanent
injunctive relief or otherwise, as a remedy for a breach of another agreement or of a statutory or
common law duty.
     (c) Nothing in this section shall preclude an employer from entering into an agreement
with an employee not to share any information, including after the employee is no longer
employed by the employer, regarding the employer or the employment that is a trade secret.
     SECTION 2. This act shall take effect six (6) months after passage.
LC001774/SUB A