The “Shadow Law” Lying in Rhode Island Non-Competes

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In January 2020, CVS Pharmacy, Inc. v. Brown reached the Superior Court of Rhode Island. The case appeared straightforward: a former employee had accepted a position with a rival chain in Washington State, and CVS sought to enforce a one-year restriction on her ability to “engage in any activity for a competitor.” The company asked for a restraining order. The court denied jurisdiction. Yet, the point of the suit was never to win, but to warn . That warning, written into hundreds of contracts across Rhode Island, illustrates the paradox of the non-compete agreement. Ostensibly designed to protect trade secrets and proprietary information, it has become a standard weapon in employer bargaining, used to suppress mobility among workers with neither trade secrets nor bargaining leverage. In a state whose small labor market magnifies every opportunity foregone, the persistence of non-competes reveals a structural imbalance between statutory silence and corporate reach.

Rhode Island’s contract law recognizes non-compete clauses as enforceable only when they are “reasonable” in scope, time, and geography. But “reasonable” has never been defined. The result is a vacuum that allows the boundaries of reasonableness to be written only at the time of. The average employee lacks the means to litigate, thus the employer rarely needs to. The mere existence of a signed clause, however unenforceable, has a chilling effect on the mobility of former employees. In this ambiguity, firms have found room to maneuver. In Saban v. Caremark Rx, L.L.C., CVS failed to extend the definition of “competition” to include any work for a rival firm, yet the litigation itself signaled the power dynamic at play. By contrast, in CVS v. Lavin, the company succeeded by narrowing its claim to the protection of specific trade secrets—precisely the exception that the Federal Trade Commission’s pending national rule preserves. These cases expose how the same legal flexibility that once protected entrepreneurial discretion now entrenches corporate insulation.

Legal scholars have long observed that unenforceable clauses can still shape behavior among every type of employee. Large employers routinely initiate cease-and-desist letters or file for temporary restraining orders in distant jurisdictions, counting on the asymmetry of cost and risk. Arbitration clauses compound this imbalance, as employees often sign away public litigation rights that put them beyond the scope of precedent. In practice, the result is a quiet form of deterrence. Workers rarely contest such claims, firms rarely lose, and the system perpetuates itself through fear of process rather than outcome. In a small state economy—one in which large employers like CVS, Hasbro, and Lifespan collectively dominate professional hiring—the shadow of litigation is often sufficient to freeze mobility for months. Even if void in court, these agreements are highly successful at producing their intended effect. 

Rhode Island’s isolation becomes clearer when viewed against its neighbors. Connecticut’s courts have applied a five-factor reasonableness test since Scott v. General Iron & Welding Co. (1976), demanding proof that restrictions protect legitimate interests without imposing undue hardship. Maine’s Legislature, through 26 Me. Rev. Stat. § 599-A, bans non-competes for any worker earning below 400 percent of the federal poverty line and explicitly declares such agreements “contrary to public policy.” New Hampshire follows with § 275:70-a, excluding “low-wage employees” from restriction altogether, while NY AG James announced in 2023 that statewide enforcement would focus on “geographically reasonable” covenants only. In this regional context, Rhode Island’s stance appears less a policy choice than a continuation of inertia. Governor Daniel McKee’s veto of House Bill 8059 in 2024 rested on the claim that it would make Rhode Island “an outlier compared to other states.” The data suggests the opposite.

The logic of the non-compete undermines the very market ideals it purports to protect. When a software engineer, nurse, or pharmacist cannot change employers without risking a lawsuit, the labor market ceases to function as a market. Wages stagnate, innovation slows, and human capital is inevitably drained to more robust political economies. The FTC estimates that eliminating non-competes nationwide would increase worker earnings by nearly $300 billion per year. Even partial reform in Rhode Island would likely yield a measurable wage premium for young professionals and technical specialists, who constitute the bulk of those restrained. 

The question, then, is not whether Rhode Island should ban non-competes outright, but whether it should continue to allow their pretense. The state could follow Maine in tying enforceability to income thresholds, or Connecticut in codifying a reasonableness test with measurable criteria. Either approach would restore a degree of clarity to a field now ruled by fear and habit. At stake is more than contractual reform. The right to pursue one’s livelihood without intimidation by finances and paperwork is a foundation of any genuine labor freedom. For Rhode Island, a state born of dissenters and entrepreneurs, it is also a question of identity. For these bad non-competes, the illusion of choice may persist in fine print, but the law need not protect its authors.

Kerem Koyluoglu is a Junior at Brown University concentrating in Classics, Archaeology, and International and Public Affairs (IAPA). He is a staff writer for the Brown Undergraduate Law Review and can be contacted at kerem_koyluoglu@brown.edu 

Ashley Park is a sophomore at Brown University concentrating in Cognitive Neuroscience and Political Science. She is an editor for the Brown Undergraduate Law Review and can be contacted at ashley_h_park@brown.edu

Wesley Horn is a sophomore at Brown University concentrating in History and Economics. He is an editor for the Brown Undergraduate Law Review and can be contacted at wesley_horn@brown.edu