Updated March 01, 2024
A Maine non-compete agreement prohibits a person from working in a similar business in order to protect an employer’s trade secrets, confidential information, or goodwill. Furthermore, a non-compete may only be used if a non-disclosure or non-solicitation cannot protect the entity’s interest in the same manner.
Laws
Legally Enforceable?
Yes, a non-compete is enforceable if they are reasonable and no broader than to protect the employer’s legitimate business interests.[1]
Such legitimate business interests of the employer include:
- Trade secrets;
- Confidential information; or
- Its goodwill.
Low-Wage Workers
In addition, an employee cannot be made part of a non-compete if earning wages at or below 400% of the federal poverty level.[2]
Disclosure (notice)
If a non-compete will be included in an offer of employment, notice must be given to the employee at least 3 days prior. The 3-day period allows the employee to review the non-compete and negotiate its terms.[3]
Effective Date
A non-compete cannot go into effect until 1 year after the start of employment or 6 months after the agreement is signed, whichever is later (does not apply to an allopathic physician or an osteopathic physician licensed under Title 32, chapter 48)
Broadcasting Employees (prohibited)
Any non-compete made between a broadcast employee (radio and tv networks) is deemed to be unreasonable.[4]
Attorneys (prohibited)
No licensed attorney is permitted to sign a non-compete agreement that places a restriction on their right to practice law.[5]
Continued Employment
Continued employment is sufficient consideration to support a non-compete agreement.[6]
Maximum Term
The maximum term depends on the geographical area covered under a non-compete, as both are taken into consideration when a non-compete is considered reasonable.
Reasonable Cases (3)
It was determined that the following cases were considered reasonable in the State of Maine.
- 3 years and covering a 100-mile radius.[7]
- 4 years and covering a 2-mile radius.[6]
- 2 years and no geographical limitation.[8]
Unreasonable Cases (1)
An unreasonable case was found to be for the restricting of a divorced spouse from selling insurance for 7 years and a 60-mile radius.[9]
Blue Penciling
Maine considers the reasonableness of a non-compete how the employer applies it against an employee, not how it is written.[6]
Therefore, if the language in a non-compete is overbroad, it may be modified by a court to make it reasonable.[9]
Penalties
If an employer violates the Maine statutes concerning the enforcement of a non-compete, they will be subject to fines no less than $5,000.
The jurisdiction of such penalties falls under the Department of Labor.[10]
What is a “Trade Secret?”
“Trade secret” means information, including, but not limited to, a formula, pattern, compilation, program, device, method, technique or process, that:A. Derives independent economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; andB. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.[11]
“Non-Compete” Definition
“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.[12]