Chapter 204 |
2019 -- H 6019 SUBSTITUTE A Enacted 07/15/2019 |
A N A C T |
RELATING TO LABOR AND LABOR RELATIONS -- RHODE ISLAND NONCOMPETITION AGREEMENT ACT |
Introduced By: Representative Christopher R. Blazejewski |
Date Introduced: April 24, 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: |
CHAPTER 58 |
RHODE ISLAND NONCOMPETITION AGREEMENT ACT |
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 |
rate. |
(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 |
agreements. |
(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 |
include: |
(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 |
employer; |
(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 |
workers: |
(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. |
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LC002416/SUB A |
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