Rhode Island noncompete ban may replace this week’s nurse exemption

As you may recall, Rhode Island was considering four bills providing two options for regulating noncompetes this session.

Two of the bills were to ban noncompetes (one in the Senate and one in the House). The other two (also one in the Senate and one in the House) were to create an exemption from noncompetes for advanced practice registered nurses.

Given all of the hype that noncompetes are bad and all the interest in the FTC’s noncompete ban rule, people expected the Legislature to send a full noncompete ban to Rhode Island Governor Dan McKee, rending the nurse exemption unnecessary. But they didn’t. They sent the advanced practice registered nurse exemption to the Governor. And he signed it on Monday (June 17).

No sooner had the Governor signed it than the Legislature apparently had regrets.

For some inexplicable reason, on June 20 — only three days after the nurse exemption was enacted — the Rhode Island Legislature saw fit to send the full noncompete ban to the Governor.

Putting aside whether Governor McKee will follow the lead of Maine Governor Janet Mills and New York Governor Kathy Hochul and recognize that a full ban is a mistake or instead follow the lead of Minnesota Governor Tim Waltz and buy into the hype, it makes no sense that the Legislature and Governor would create a brand new law (the nurse exemption) only to have it evaporate a few days later.

In fact, Governor Mills chastised the Maine Legislature for doing that type of thing with a five-year span between the first law (a law similar to Rhode Island’s 2020 law) and the proposed ban. Specifically, in a well-reasoned letter explaining the reasons for her veto of the proposed noncompete ban, she said the following:

[The law passed in Maine in 2019] places strict limits on the use of noncompete agreements in Maine, and bars their use with low-income workers like hairdressers and fast-food workers who stand to be the most harshly impacted by their terms. [The proposed bill] would go well beyond that by rendering most noncompete agreements unenforceable, even when they are designed to protect a former employer’s confidential information from disclosure to commercial competitors.

This ignores the fact that noncompete agreements can be critical tools to prevent employees from taking unfair advantage of their former employers. Whether a technology start-up or a microbrewery, businesses must hire employees and invest heavily in their training and development in order to grow. In doing so, these employees are often entrusted with manufacturing techniques, commercial strategies, or other confidential information that is integral to the success of the business. It would be both unfair and contrary to public policy to prohibit employers from requiring a commitment from their employees not to take what they have learned and immediately put that sensitive information to work for a competitor.

The Labor and Housing Committee was presented with no evidence that the recently enacted statute is inadequate, or that noncompete agreements are being abused in Maine. To the contrary, the Department of Labor testified in opposition to the bill, explaining that they have received no complaints that suggest a need for amendments to the current law. Business interests – large and small – and healthcare providers also opposed the bill out of concern for the effect it would have on the operations of their members, and I have heard directly from Maine-based businesses echoing those concerns.

Given the timing of the nurse exemption — signed by the Governor within days of when he received it — you can expect that the bill will be signed next week, if not vetoed by the Governor. And if he does veto it, the Legislature might be able to override the veto, though the timing would be very tight.

More to come next week.

* * *

Firm resources: 

We know how hard it is to keep up with the ever-changing requirements around the country. To help, we have created the following resources (available for free):

We hope you find all of these resources useful. More are coming.

And please note that we are grateful for all of the input we’ve received over the years, and welcome any suggestions for improvements that you may be willing to share.

* * *

*A huge thank you to Erika Hahn for all of her extraordinary help in tracking and monitoring all of the bills around the country and helping me make sure that all of our resources are current and accurate!