COURTS RULE IN FAVOR OF THE EMPLOYER’S AGREEMENT IN RECENT CASE
The Rhode Island Supreme Court recently addressed the enforceability of a non-competition provision. In Walls v. Griggs & Browne Pest Control, Inc., the Court reviewed an agreement between Brian Walls and his employer in 2020, which the parties agreed upon nine years after Mr. Walls began his employment and which amended a prior non-competition agreement. The 2020 agreement prohibited Mr. Walls from soliciting business and performing services for the employer’s former or current clients for a period of 24 months.
In September of 2021, the employer issued a policy that required its employees to receive a COVID-19 vaccination or terminate their employment. Mr. Walls loudly expressed his opposition to the vaccination policy at a meeting with his supervisors, which caused his employment to terminate him. The parties disputed whether Mr. Walls resigned or if the employer fired him.
One month later, Mr. Walls began his own business and solicited his prior employer’s clients. The employer sued to enforce the non-competition agreement and a Superior Court Judge found that the agreement was enforceable. The Court found that Mr. Walls continued employment had constituted adequate consideration for the 2020 non-competition agreement and that Mr. Walls violated the agreement by soliciting his former employer’s clients. Mr. Walls then appealed to the Rhode Island Supreme Court.
In affirming, the Rhode Island Supreme Court stated that it disfavors the enforcement of non-competition agreements. However, the Court found that the employer’s agreement withstood scrutiny because it did not extend beyond what was necessary to protect the employer’s interests. Mr. Walls argued that the agreement should be unenforceable because he had been terminated but the Court found that the agreement applied even if Mr. Walls’ separation was involuntary. The Court also noted that it had previously upheld agreements with stronger limitations.
Key Takeaway
Non-competition agreements have recently come under scrutiny. Massachusetts significantly limited the application of non-competition agreements by legislation and there has been similar legislation proposed in Rhode Island and by Congress. Employers should anticipate that Rhode Island – by legislation or through case law – could limit the applicability of non-competition agreements. But for now, because of the Walls decision, employers received clear guidance: a 24-month non-solicitation provision is enforceable under Rhode Island law.
If you have a question about your company’s use of a non-competition agreement, contact Attorney Matthew C. Reeber, who leads PLDO’s Employment Law practice, at 401-824-5105 or [email protected].
