Richardson, Whitman, Large & Badger


MAINE ENACTS NEW RESTRICTIONS ON NON-COMPETE AGREEMENTS

By Eric J. Uhl/July 15, 2019

Maine has enacted a new law, signed by Governor Mills on June 28, 2019, to restrict the scope and enforcement of non-compete agreements.  Under the new law, called An Act to Promote Keeping Workers in Maine, an employer cannot enter into a non-compete agreement with an employee who earns wages that are at or below 400% of the federal poverty level.  The new law applies to a “Noncompete Agreement,” which is defined as a contract provision that prohibits an employee from working in the same or a similar profession or in a specified geographic area for a certain period of time following termination. 

In addition, an employer must disclose the requirement of a non-compete agreement in any advertisement for that position and must provide an employee (or prospective employee) with a copy of the agreement at least 3 business days before requiring the employee to sign the agreement.  Furthermore, the terms of the non-compete agreement would not go into effect until at least one year after the start of employment or 6 months after the employee signs the agreement, whichever is later.  

The new law keeps intact existing case law providing that a non-compete agreement is not enforceable unless it is no broader than necessary to protect a legitimate business interest, such as protecting trade secrets or confidential information or customer good will.  

Finally, the new law prohibits employers from entering into or enforcing a “restrictive employment agreement,” which is defined as an agreement between employers that prohibits or restricts one employer from soliciting or hiring another employer’s employees or former employees.  The law also provides for monetary penalties for violations.

The new law takes effect on September 18, 2019, and applies to contracts entered into or renewed on and after that date.


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