THIS ISSUE'S HEADLINES

Non-Compete Agreements in Rhode Island Remain Enforceable (For Now)

How Could RI’s New Legislative Bills Impact Your Estate Plan?

How Are Remote Work, State Regulations, And Personal Jurisdiction Impacting Employers With Out-Of-State Remote Employees? Published by Roger Williams University Law Review

Fake or Real? Importance of Trust in Media Generated by AI, Published by Providence Journal


NON-COMPETE AGREEMENTS IN RHODE ISLAND REMAIN ENFORCEABLE (FOR NOW)

On June 26, 2024, Governor Dan McKee vetoed two bills (S2436 A and H8059 A) that were passed by the General Assembly in the late hours of its final day of the 2024 session. The bills were amendments to the Rhode Island Noncompetition Agreement Act that, if signed into law, would have made it illegal for employers to enter into non-compete agreements with employees. Further, the proposed law would nullify and void existing non-compete agreements that do not qualify for an exemption under the new law. One of those important exemptions was that a buyer and seller of a business could still agree that the seller will refrain from competing against the buyer after the sale.

Currently, Rhode Island bans non-compete agreements for particular categories of workers, such as low-wage employees, students, and underage workers. The proposed law would have gone much further and be applied much more broadly and generally to all employees. This legislation followed on the heels of the Federal Trade Commission’s (FTC) decision in April (by a partisan 3-2 vote) to ban virtually all non-compete agreements, except in certain circumstances, such as those involving the sale of a business or with “senior executives” making over $151,164 and who have power to make policy decisions for the business. The FTC rule – which is already being challenged in courts across the country – is slated to go into effect in September unless it is halted or curtailed by a court.

In addition to this “senior executive” exemption under the FTC – which was not in the proposed Rhode Island law – there is another significant difference: the FTC rule requires employers to affirmatively provide notice to employees with non-compete agreements that the non-compete clause cannot and will not be enforced against the employee. The proposed Rhode Island law would not have such an affirmative obligation.

Key Takeaways

The proposed law would not have been all bad for employers, however. It would have allowed non-solicitation agreements where employees agree not to solicit or hire other employees. It would also preserve the legality of agreements in which employees agree not to disclose the employer’s trade secrets, customer lists, or the employer’s future business plans. And, the proposed law would grant employers the right to bring a civil action against any employee who violates these provisions or wrongfully uses the employer’s trade secrets.

Although this law did not pass this session, it shows the General Assembly’s desire to significantly alter the non-compete landscape in Rhode Island. We expect this legislation – or some close version to it – to be reintroduced in next year’s session. We will continue to keep an eye out for developments in this area as well as the looming September deadline for implementation of the FTC’s rule.

If you have any questions, please contact Brian J. Lamoureux, a Partner on the Firm’s Litigation, Employment, and Cybersecurity team, at bjl@pldolaw.com or 401-824-5155.

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HOW COULD RI’S NEW LEGISLATIVE BILLS IMPACT YOUR ESTATE PLAN?

The Rhode Island General Assembly's recent legislative session brought forth several bills that hold significant implications for estate planning and probate practices. Among the proposed legislation, there are notable bills aimed to increase the state’s estate tax exemption, protect inheritances from the liens or creditors of beneficiaries, and introduce new disclosure obligations regarding public rights along the coastline.

While some of these bills successfully navigated the legislative process, others did not. Below is a summary of the legislation, current status of each bill, and potential impact on your estate planning efforts.

1. Senate and House Bills S2064/H7487 - These bills proposed increasing the net taxable estate exemption to $4,000,000 for deaths occurring on or after January 1, 2025. Another bill (S2065) suggested increasing the exemption to $3,600,000, with an additional $1,000,000 increase each year thereafter. The goal was to boost Rhode Island’s economic competitiveness, as many states have eliminated their state-level estate taxes, and Rhode Island is among the few with a threshold below $3,000,000.
   Outcome: These bills remained “pending in committee” and did not reach a vote. Currently, the Rhode Island estate tax threshold is $1,774,583. This means that if your total estate—including your home, life insurance policies, retirement accounts, business interests, and bank accounts—exceeds this threshold, you will face an estate tax liability without proper planning.
   
   
2. Senate Bill S2428 – This bill proposed that any benefit a beneficiary is entitled to would be exempt from lien, attachment, or garnishment and would not be transferable or assignable. It also included provisions for disclaiming such benefits, aiming to protect inheritances from creditors of the beneficiaries.
   Outcome: The Senate Judiciary Committee held the bill for further study, and it did not reach a vote. To protect inheritances from future creditors or in the event of divorce, consult an estate planning attorney to set up appropriate creditor provisions.
   
   
3. Senate Bill S2185 (Shoreline Access Disclosure Bill) – Shoreline access is hotly contested issue in coastal communities. This bill requires written acknowledgment from any buyer of oceanfront or shoreline property that they be informed of the public’s rights and privileges of the shore.
   Outcome: This bill was passed and signed into law by the Governor. The impact of the passage of this law is that when selling coastline properties, whether individually or in an estate, a buyer must be informed of the public’s rights, including the public right to access to the shoreline. As the laws related to shoreline access are constantly shifting, it’s important to check-in with how this law will impact sale of these properties.

The results of Rhode Island’s 2024 general legislative session, including the proposed bills that were not enacted, could materially affect your estate planning strategies. Given these developments, now is an opportune time to review and potentially update your estate plans to ensure they align with the latest legal landscape. If you have questions about your estate plan, please contact PLDO Partner David P. Craven, Esquire at 401-824-5100 or email dcraven@pldolaw.com.

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Personal jurisdiction is an area of employment law which is constantly changing and evolving. For example, the COVID-19 pandemic and the effects stemming therefrom have sent unprecedented shockwaves throughout the workplace, and the law is struggling to catch up. With remote work becoming widely accepted and, in some instances, the new normal, there is great uncertainty regarding where employers may be sued stemming from the courts’ handling of jurisdictional issues.

In an article published by Roger Williams University Law Review, entitled Traditional Notions of Fair Play and Substantial Justice?: The Interplay Between Remote Work, State Regulations, and Personal Jurisdiction, Attorney Kathryn M. Couture discusses personal jurisdiction, its interplay with the Due Process Clause of the Fourteenth Amendment, and the Supreme Court’s recent decision in Mallory v. Norfolk Southern Railroad Company, which reinvigorated a century-old decision involving a corporate defendant’s consent to personal jurisdiction by way of its compliance with state statutory laws.

Part II of the article examines the diverging interpretations and applications of the personal jurisdiction standard by different courts faced with similar questions of law during the COVID-19 pandemic.

In Part III of the article, Attorney Couture attempts to reconcile these differences and, through the lens of Mallory, discusses the potential impact on employers moving forward. Importantly, she provides employers with a general understanding of what to expect when employing remote workers in different states and highlights some potential implications that may result. To read the published article, click here.

If you have questions regarding remote employees or general employment law questions, please contact Attorney Couture at 401-824-5100 or kcouture@pldolaw.com.

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PLDO Partner Brian J. Lamoureux, a prominent business litigator and employment attorney who is a leading voice on social and digital media law, was recently featured as a “Your Turn” Guest Columnist in the Providence Journal on July 13, 2024. Click here to read his article, entitled Fake or Real? Importance of Trust in Media Generated by AI, which addresses the issue of trust as the line between what is really human and artificially created continues to blur and the problems AI technologies pose, particularly in an election year.

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