Title 28
Labor and Labor Relations

Chapter 59
Rhode Island Noncompetition Agreement Act

R.I. Gen. Laws § 28-59-2

§ 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 who or 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 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.

History of Section.
P.L. 2019, ch. 204, § 1; P.L. 2019, ch. 264, § 1.