An Act to Prohibit Noncompete Clauses
Maine Legislature, Session 131, LD 1496
Committee: Labor and Housing
Sponsors: WARREN, TIPPING, ROEDER
Amends: 26 MRSA §599-A

Legislative Document
No. 1496
H.P. 951
House of Representatives, April 5, 2023
An Act to Prohibit Noncompete Clauses
Reference to the Committee on Labor and Housing suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative WARREN of Scarborough.
Cosponsored by Senator TIPPING of Penobscot and
Representative: ROEDER of Bangor.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  26 MRSA §599-A, as enacted by PL 2019, c. 513, §1, is amended to read:
§599-A.  Noncompete agreements
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings.
A.  "Federal poverty level" means the nonfarm income official poverty line for an 
individual, as defined by the federal Office of Management and Budget and revised 
annually in accordance with the Omnibus Budget Reconciliation Act of 1981, Section 
673(2).
B.  "Noncompete agreement" means a contract or contract provision that prohibits an 
employee or prospective employee from working in the same or a similar profession 
or in a specified geographic area for a certain period of time following termination of 
employment.
2.  Public policy; enforceability of noncompete agreements.  Noncompete 
agreements are contrary to public policy and are enforceable only in situations described 
in subsection 3-B and only to the extent that they are reasonable and are no broader than 
necessary to protect one or more of the following legitimate business interests of the 
employer:.
A.  The employer's trade secrets, as defined in Title 10, section 1542, subsection 4;
B.  The employer's confidential information that does not qualify as a trade secret; or
C.  The employer's goodwill.
A noncompete agreement may be presumed necessary if the legitimate business interest 
cannot be adequately protected through an alternative restrictive covenant, including but 
not limited to a nonsolicitation agreement or a nondisclosure or confidentiality agreement.
3.  Prohibited for certain workers.  Notwithstanding subsection 2, an employer may 
not require or permit an employee earning wages at or below 400% of the federal poverty 
level to enter into a noncompete agreement with the employer.
3-A.  Noncompete agreements prohibited.  An employer may not require or permit 
an employee to enter into a noncompete agreement with the employer.
3-B.  Exceptions.  Noncompete agreements are allowable in the following situations, 
in accordance with subsection 2 and subject to the requirements of this section.
A.  A seller of a business in this State may be bound by a noncompete agreement 
prohibiting the seller from opening a competing business in the same geographic area 
as the business that was sold;
B.  A shareholder in a limited liability company organized under the laws of this State 
may be bound by a noncompete agreement if the shareholder sells or disposes of all of 
the shareholder's shares; or
C.  A member of a partnership organized under the laws of this State may be bound by 
a noncompete agreement if the partnership is dissolved.
3-C.  Out-of-state agreements.  A noncompete agreement between an out-of-state 
employer and a resident of this State is unenforceable.  If the noncompete agreement made 
between an out-of-state employer and a resident of this State includes a choice of law 
provision, this State may not enforce that provision if it violates the State's public policy 
described under subsection 2.
4.  Disclosure; notice.  An employer shall disclose prior to an offer of employment 
with the employer that will require the acceptance of a noncompete agreement a statement 
that a noncompete agreement will be required.
An employer shall notify an employee or prospective employee of a noncompete agreement 
requirement and provide a copy of the noncompete agreement not less than 3 business days 
before the employer requires the agreement to be signed to allow time for the employee or 
prospective employee to review the agreement and negotiate the terms of the agreement or 
employment with the employer if the employee or prospective employee wishes to do so.
4-A.  Posted notice required.  The Department of Labor shall create a poster 
containing the laws governing noncompete agreements under this section that employers 
shall post in a central workplace location.  The poster must be printed in a minimum font 
size, as determined by the Department of Labor, in accordance with provisions of law 
governing disability-related accommodations.
5.  Effective date of a noncompete agreement.  Except for a noncompete agreement 
between an employer and an allopathic physician or an osteopathic physician licensed 
under Title 32, chapter 48 or chapter 36, respectively, the terms of a noncompete agreement 
do not take effect until after one year of the employee's employment with the employer or 
a period of 6 months from the date the agreement was signed, whichever is later.
6.  Penalty; enforcement.  An employer that violates subsection 3 or 4 3-A commits 
a civil violation for which a fine of not less than $5,000 may be adjudged.  The Department 
of Labor is responsible for enforcement of this section.
7.  Application.  This section applies to all noncompete agreements entered into or 
renewed after the effective date of this section.
SUMMARY
This bill prohibits an employer from requiring or permitting an employee to enter into 
a noncompete agreement with the employer, regardless of the amount of the employee's 
earned wages.  It prohibits noncompete agreements between an out-of-state employer and 
a resident of this State.  It authorizes noncompete agreements in specific nonemployment-
related situations, subject to certain conditions.