Generally speaking, non-compete agreements are generally contrary to public policy. While there are no federal laws regulating non-compete agreements, many states have implemented their own laws in regard to non-compete agreements. In 2019, Governor Janet Mills signed into law L.D. 733, “An Act to Promote Keeping Workers in Maine.” This law placed significant limitations on a employer's ability to implement non-compete agreement with its employees. Under Maine Law, 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 non-solicitation agreement or a nondisclosure or confidentiality agreement."
What is a non-compete agreement? Under Maine law, a non-compete agreement is defined as 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." These agreements are only enforceable if "they are reasonable and are no broader than necessary to protect one or more of the following legitimate business interests of the employer:
Despite the State of Maine permitting non-compete agreements, an employer is prohibited from requiring an employee signing a non-compete agreement if that employee is "earning wages at or below 400% of the federal poverty level..." As of December 2022, that would be $54,360.
There are also disclosure requirements and a delay in the effective date of the non-compete. Failure to abide by state law could result in a fine not less than $5,000.
An alternative for non-compete agreements are non-solicitation agreements. Non-solicitation agreements typically prevent employees for a period of time from soliciting customers (and sometimes, former employees) from working with them. The intent here is to prevent an employee gaining the customer list of the employer, leaving and using that list for their own business. These agreements usually are limited in time and scope. Confidentiality agreements are also another alternative to non-competes. Confidentiality agreements or non-disclosers agreements can last indefinitely and can be quite broad.
Before preparing a non-compete, non-solicitation or confidentiality agreement, speak with your attorney.
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John M. Burke manages the firm's Maine cannabis law practice. Mr. Burke advises and represents the firm's clients throughout Maine in both the Medical and Adult Use cannabis programs in a wide range of Maine cannabis law matters. In addition to Mr. Burke's Maine cannabis law practice, Mr. Burke advises and assists the firm's clients in a variety of industries on various intellectual property matters throughout the United States. Learn more about John Burke by clicking here.
Caseiro Burke is a boutique law firm that specializes in intellectual property law and cannabis compliance and licensing in the State of Maine. We offer clients creative, cost-effective and reliable legal solutions in all intellectual property and Maine cannabis law matters.