Rhode Island 2023 Regular Session

Rhode Island Senate Bill S0888 Compare Versions

Only one version of the bill is available at this time.

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5	5	2023 -- S 0888
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7	7	LC001991
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9	9	S T A T E O F R H O D E I S L A N D
10	10	IN GENERAL ASSEMBLY
11	11	JANUARY SESSION, A.D. 2023
12	12	____________
13	13
14	14	A N A C T
15	15	RELATING TO LABOR AND LABOR RELATIONS -- RHODE ISLAND
16	16	NONCOMPETITION AGREE MENT ACT
17	17	Introduced By: Senators LaMountain, Lauria, McKenney, Tikoian, Burke, and Valverde
18	18	Date Introduced: March 30, 2023
19	19	Referred To: Senate Judiciary
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21	21
22	22	It is enacted by the General Assembly as follows:
23	23	SECTION 1. Sections 28-59-2 and 28-59-3 of the General Laws in Chapter 28-59 entitled 1
24	24	"Rhode Island Noncompetition Agreement Act" are hereby amended to read as follows: 2
25	25	28-59-2. Definitions. 3
26	26	As used in this chapter: 4
27	27	(1) “Business entity” means any person as defined in § 43-3-6 and includes a corporation, 5
28	28	business trust, estate trust, partnership, association, joint venture, government, governmental 6
29	29	subdivision or agency, or any other legal or commercial entity. 7
30	30	(2) “Earnings” means wages or compensation paid to an employee in the first forty (40) 8
31	31	hours of work in a given week, not inclusive of hours paid at an overtime, Sunday, or holiday rate. 9
32	32	(3) “Employee” means an individual who works for hire, including an individual employed 10
33	33	in a supervisory, managerial, or confidential position, but shall not include an independent 11
34	34	contractor. 12
35	35	(4) “Employer” means any person, business entity, partnership, individual proprietorship, 13
36	36	joint venture, firm, company, or other similar legal entity who or that employs one or more 14
37	37	employees, and shall include the state and its instrumentalities and political subdivisions, public 15
38	38	corporations, and charitable organizations. 16
39	39	(5) “Forfeiture agreement” means an agreement that imposes adverse financial 17
40	40	consequences on a former employee as a result of the termination of an employment relationship, 18
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43	43	LC001991 - Page 2 of 5
44	44	regardless of whether the employee engaged in competitive activities, following cessation of the 1
45	45	employment relationship. Forfeiture agreements do not include forfeiture for competition 2
46	46	agreements. 3
47	47	(6) “Forfeiture for competition agreement” means an agreement that by its terms or through 4
48	48	the manner in which it is enforced, imposes adverse financial consequences on a former employee 5
49	49	as a result of the termination of an employment relationship if the employee engages in competitive 6
50	50	activities. 7
51	51	(7) “Low-wage employee” means an employee whose average annual earnings, as defined 8
52	52	in subsection (2), are not more than two hundred fifty percent (250%) of the federal poverty level 9
53	53	for individuals as established by the United States Department of Health and Human Services 10
54	54	federal poverty guidelines. 11
55	55	(8) “Noncompetition agreement” means an agreement not to compete with a specific 12
56	56	business or entity to include, but not be limited to, an agreement prohibited by the provisions of § 13
57	57	28-59-3(a) between an employer and an employee, or otherwise arising out of an existing or 14
58	58	anticipated employment relationship, under which the employee or expected employee agrees that 15
59	59	he or she will not engage in certain specified activities competitive with his or her employer after 16
60	60	the employment relationship has ended. Noncompetition agreements include forfeiture for 17
61	61	competition agreements, but do not include: 18
62	62	(i) Covenants not to solicit or hire employees of the employer; 19
63	63	(ii) Covenants not to solicit or transact business with customers, clients, or vendors of the 20
64	64	employer; 21
65	65	(iii) Noncompetition agreements made in connection with the sale of a business entity or 22
66	66	all or substantially all of the operating assets of a business entity or partnership, or otherwise 23
67	67	disposing of the ownership interest of a business entity or partnership, or division or subsidiary of 24
68	68	any of the foregoing, when the party restricted by the noncompetition agreement is a significant 25
69	69	owner of, or member or partner in, the business entity who will receive significant consideration or 26
70	70	benefit from the sale or disposal; 27
71	71	(iv) Noncompetition agreements originating outside of an employment relationship; 28
72	72	(v) Forfeiture agreements; 29
73	73	(vi) Nondisclosure or confidentiality agreements; 30
74	74	(vii) Invention assignment agreements; 31
75	75	(viii) Noncompetition agreements made in connection with the cessation of or separation 32
76	76	from employment if the employee is expressly granted seven (7) business days to rescind 33
77	77	acceptance; or 34
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81	81	(ix) Agreements by which an employee agrees to not reapply for employment to the same 1
82	82	employer after termination of the employee. 2
83	83	(9) “Trade secret” means information as defined in § 6-41-1. 3
84	84	28-59-3. Enforceability. 4
85	85	(a) Except as provided in subsection (d) of this section, A a noncompetition agreement 5
86	86	shall not be enforceable against an employee. the following types of workers: 6
87	87	(1) An employee who is classified as nonexempt under the Fair Labor Standards Act, 29 7
88	88	U.S.C. §§ 201-219; 8
89	89	(2) Undergraduate or graduate students who participate in an internship or otherwise enter 9
90	90	a short-term employment relationship with an employer, whether paid or unpaid, while enrolled at 10
91	91	an educational institution; 11
92	92	(3) Employees age eighteen (18) or younger; or 12
93	93	(4) A low-wage employee. 13
94	94	(b) A noncompetition agreement may be enforceable if reasonable in scope, time-frame 14
95	95	and application and the noncompetition agreement is entered pursuant to an agreement to sell a 15
96	96	business entity or an equity interest in a business. 16
97	97	(b)(c) This section does not render void or unenforceable the remainder of a contract or 17
98	98	agreement containing the unenforceable noncompetition agreement, nor does it preclude the 18
99	99	imposition of a noncompetition restriction by a court, whether through preliminary or permanent 19
100	100	injunctive relief or otherwise, as a remedy for a breach of another agreement or of a statutory or 20
101	101	common law duty. 21
102	102	(c)(d) Nothing in this section shall preclude an employer from entering into an agreement 22
103	103	with an employee not to share any information, including after the employee is no longer employed 23
104	104	by the employer, regarding the employer or the employment that is a trade secret, customer lists, 24
105	105	including the names, addresses, identities of customers, or future business plans. 25
106	106	(e) Any noncompetition agreement in violation of subsection (a) of this section shall be 26
107	107	null and void as a violation of public policy. 27
108	108	SECTION 2. Chapter 28-59 of the General Laws entitled "Rhode Island Noncompetition 28
109	109	Agreement Act" is hereby amended by adding thereto the following section: 29
110	110	28-59-4. Civil action by employer. 30
111	111	An employer may bring a civil action against any employee who, pursuant to an agreement 31
112	112	described in § 28-59-3(d), violates that agreement and discloses or wrongfully utilizes trade secrets, 32
113	113	and the successful employer may be awarded injunctive relief, compensatory damages, punitive 33
114	114	damages, attorneys' fees and costs. 34
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118	118	SECTION 3. This act shall take effect upon passage. 1
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125	125	EXPLANATION
126	126	BY THE LEGISLATIVE COUNCIL
127	127	OF
128	128	A N A C T
129	129	RELATING TO LABOR AND LABOR RELATIONS -- RHODE ISLAND
130	130	NONCOMPETITION AGREE MENT ACT
131	131	***
132	132	This act would prohibit noncompetition agreements except for noncompetition agreements 1
133	133	between a seller and buyer of a business. 2
134	134	This act would take effect upon passage. 3
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