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Maine Non-Competes May be Coming to an End   

03 Apr

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Update Applicable to:Effective date
All employers with at least one employee performing work in MaineSee details below


What happened?

On March 14, 2024, Maine Legislature passed a bill that if enacted into law, would ban all non-competes from the effective date forward. Note: as of 3/27/2024 the bill has passed both chambers and is expected to be enacted.


What are the details?

The bill would amend the 2019 law to ban all non-competes in the employment context, with limited exceptions, which are:

(A) A seller of a business in this State may be bound by a non-compete 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 non-compete 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.

A non-compete agreement between an out-of-state employer and a resident is unenforceable, and if the noncompete includes a choice of law provision (a provision that allows the parties to choose what law must apply to their relationship in case of a grievance), the state of Maine may not enforce that provision if it violates the State’s public policy (Section 3-C of the bill).

It also dictates that the Maine Department of Labor shall create a poster containing the non-compete laws and must be posted in a “central workplace location.”

The cost for a violation is a minimum of $ 5,000.


Business Considerations

  • Audit your current contracts to prepare for the upcoming ban. You should make sure key employees have their non-competes in place before the effective date.
  • The law will only ban non-competes entered or renewed after the bill has been enacted law.


Resources


Source References

Need help understanding how changes to employment laws will affect your business?

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This communication is intended solely for the purpose of conveying information. The present post might incorporate hyperlinks directing readers to websites managed by third-party entities. The inclusion of any links within this communication is meant to serve as points of reference and could encompass opinion articles from various law firms, articles from HR associations, official websites, news releases, and documents of government agencies, and other relevant third-party sources. Vensure has no authority over these external websites and bears no responsibility for their content. Furthermore, Vensure does not endorse the materials present on these websites. The contents of this communication should not be interpreted as legal advice or as a legal standpoint concerning specific facts or scenarios. Nor should it be deemed an exhaustive compilation of facts potentially pertinent to federal, state, or local laws. It is strongly advised that employers solicit legal guidance from an employment attorney when undertaking actions in response to any legal updates provided. This is due to the possibility of future alterations occurring in federal, state, and local laws, regulations, as well as the directives and guidelines issued by governing agencies. These changes may transpire at any given time, potentially rendering certain portions of the content within this update void or inaccurate.

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