AN ACT RELATING TO LABOR AND LABOR RELATIONS -- RHODE ISLAND NONCOMPETITION AGREEMENT ACT (Prohibits noncompete agreements except for noncompete agreements between a seller and buyer of a business; creates civil action for an employer for the violation of an agreement by employee regarding disclosure or wrongful utilization of trade secrets.)

S2160

2026 -- S 2160
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LC004002
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
____________
A N A C T
RELATING TO LABOR AND LABOR RELATIONS -- RHODE ISLAND
NONCOMPETITION AGREEMENT ACT

Introduced By:
Senator Matthew L. LaMountain

Date Introduced:
January 16, 2026

Referred To:
Senate Judiciary
It is enacted by the General Assembly as follows:
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SECTION 1. Sections 28-59-2 and 28-59-3 of the General Laws in Chapter 28-59 entitled
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"Rhode Island Noncompetition Agreement Act" are hereby amended to read as follows:
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28-59-2. Definitions.
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As used in this chapter:
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(1) "Annualized earnings" means the compensation, including annualized salary, expected
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bonuses, expected commissions, or any other form of taxable compensation, reflected or that is
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expected to be reflected as wages, tips, and other compensation on the employee's IRS Form W-2
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plus any elective deferrals not reflected as wages, tips, and other compensation on the employee's
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IRS Form W-2, such as, without limitation, employee contributions to a 401 (k) plan, a 403(b) plan,
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a flexible spending account, or a health savings account, or commuter benefit-related deductions.
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(1)
(2)
“Business entity” means any person as defined in § 43-3-6 and includes a
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corporation, business trust, estate trust, partnership, association, joint venture, government,
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governmental subdivision or agency, or any other legal or commercial entity.
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(2) “Earnings” means wages or compensation paid to an employee in the first forty (40)
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hours of work in a given week, not inclusive of hours paid at an overtime, Sunday, or holiday rate.
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(3) “Employee” means an individual who works for hire, including an individual employed
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in a supervisory, managerial, or confidential position, but shall not include an independent
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contractor.

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(4) “Employer” means any person, business entity, partnership, individual proprietorship,
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joint venture, firm, company, or other similar legal entity who or that employs one or more
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employees, and shall include the state and its instrumentalities and political subdivisions, public
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corporations, and charitable organizations.
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(5) “Forfeiture agreement” means an agreement that imposes adverse financial
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consequences on a former employee as a result of the termination of an employment relationship,
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regardless of whether the employee engaged in competitive activities, following cessation of the
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employment relationship. Forfeiture agreements do not include forfeiture for competition
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agreements.
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(6) “Forfeiture for competition agreement” means an agreement that by its terms or through
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the manner in which it is enforced, imposes adverse financial consequences on a former employee
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as a result of the termination of an employment relationship if the employee engages in competitive
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activities.
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(7)
“Low-wage employee” means an employee whose average annual earnings, as defined
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in subsection (2), are not more than two hundred fifty percent (250%) of the federal poverty level
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for individuals as established by the United States Department of Health and Human Services
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federal poverty guidelines.
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(8) “Noncompetition agreement” means
an agreement not to compete with a specific
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business or entity to include, but not be limited to,
an agreement
prohibited by the provisions of §
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28-59-3(a)
between an employer and an employee, or otherwise arising out of an existing or
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anticipated employment relationship, under which the employee or expected employee agrees that
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he or she will not engage in certain specified activities competitive with his or her employer after
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the employment relationship has ended. Noncompetition agreements include forfeiture for
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competition agreements, but do not include:
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(i) Covenants not to solicit or hire employees of the employer;
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(ii)
Covenants not to solicit or transact business with customers, clients, or vendors of the
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employer;
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(iii) Noncompetition agreements made in connection with the sale of a business entity or
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all or substantially all of the operating assets of a business entity or partnership, or otherwise
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disposing of the ownership interest of a business entity or partnership, or division or subsidiary of
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any of the foregoing, when the party restricted by the noncompetition agreement is a significant
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owner of, or member or partner in, the business entity who will receive significant consideration or
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benefit from the sale or disposal;
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(iv) Noncompetition agreements originating outside of an employment relationship;

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(v) Forfeiture agreements;
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(vi) Nondisclosure or confidentiality agreements;
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(vii) Invention assignment agreements;
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(viii)
Noncompetition agreements made in connection with the cessation of or separation
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from employment if the employee is expressly granted seven (7) business days to rescind
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acceptance; or
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(ix) Agreements by which an employee agrees to not reapply for employment to the same
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employer after termination of the employee
;
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(x) Noncompetition agreements made by financial institutions, as defined by the Gramm-
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Leach-Bliley Act, engaged in insurance activities and financial institutions subject to Title V of the
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Gramm-Leach-Bliley Act, 15 U.S.C. § 6801 et seq
.
; or
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(xi) Noncompetition agreements made by financial institutions subject to Title V of the
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Gramm-Leach-Bliley Act, 15 U.S.C. § 6801 et seq
.
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(9) “Trade secret” means information as defined in § 6-41-1.
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28-59-3. Enforceability.
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(a)
A

Except as provided in this section, a
noncompetition agreement shall not be
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enforceable against
the following types of workers:

an employee.
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(1) An employee who is classified as nonexempt under the Fair Labor Standards Act, 29
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U.S.C. §§ 201-219;
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(2) Undergraduate or graduate students who participate in an internship or otherwise enter
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a short-term employment relationship with an employer, whether paid or unpaid, while enrolled at
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an educational institution;
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(3) Employees age eighteen (18) or younger; or
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(4) A low-wage employee.
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(b) A noncompetition agreement may be enforceable if reasonable in scope, time-frame
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and application and the noncompetition agreement is entered pursuant to an agreement to sell a
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business entity or an equity interest in a business.
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(b)
(c)
This section does not render void or unenforceable the remainder of a contract or
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agreement containing the unenforceable noncompetition agreement, nor does it preclude the
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imposition of a noncompetition restriction by a court, whether through preliminary or permanent
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injunctive relief or otherwise, as a remedy for a breach of another agreement or of a statutory or
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common law duty.
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(c)
(d)
Nothing in this section shall preclude an employer from entering into an agreement
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with an employee not to share any information, including after the employee is no longer employed

LC004002 - Page 3 of 5
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by the employer, regarding the employer or the employment that is a trade secret
, customer lists,
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including the names, addresses, identities of customers, or future business plans
.
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(e) Notwithstanding other provisions to the contrary, a noncompetition agreement is void
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and unenforceable against an employee unless the employee's annualized earnings exceed one
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hundred twenty-five thousand dollars ($125,000).
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(f) Nothing in this chapter shall be construed to authorize, permit or otherwise enable the
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enforcement of a noncompete clause in any profession, occupation, or industry where such clauses
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are otherwise prohibited by existing state or federal law.
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SECTION 2. Chapter 28-59 of the General Laws entitled "Rhode Island Noncompetition
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Agreement Act" is hereby amended by adding thereto the following sections:
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28-59-4. Civil action by employer.

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An employer may bring a civil action against any employee who, pursuant to an agreement
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described in § 28-59-3(d), violates that agreement and discloses or wrongfully utilizes trade secrets,
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and the successful employer may be awarded injunctive relief, compensatory damages, punitive
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damages, attorneys' fees and costs.
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28-59-5. Severability.

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If any provision of a chapter or the application thereof to any person or circumstances is
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held invalid, such invalidity shall not affect other provisions or applications of the chapter which
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can be given effect without the invalid provision or application, and to this end the provisions of
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this chapter are declared to be severable.
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SECTION 3. This act shall take effect on January 1, 2027.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO LABOR AND LABOR RELATIONS -- RHODE ISLAND
NONCOMPETITION AGREEMENT ACT
***
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This act would prohibit noncompetition agreements except for noncompetition agreements
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between a seller and buyer of a business. This act would also create a civil action for an employer
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for the violation of an agreement by an employee regarding disclosure or wrongful utilization of
4
trade secrets.
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This act would take effect on January 1, 2027.
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