Maine's new no-poaching statute survives federal court challenge

Describing the measure as an effort to spur economic growth, the Maine Legislature in 2019 enacted a law limiting the use of noncompetes and prohibiting "no-poaching" agreements between employers. A recent federal case challenged the statute's constitutionality, arguing the law hasn't achieved its stated purpose of protecting workers. Although Judge Jon D. Levy of the U.S. District Court for the District of Maine dismissed the complaint and found the state's no-poaching law constitutional, the decision contains some important lessons for employers.

Background

An Act to Promote Keeping Workers in Maine, enacted in September 2019, consists of two foundational statutes.

Noncompetes. Under 26 M.R.S.A. § 599-A, employers can't enter into noncompete agreements with low-wage workers, defined as anyone earning wages at or below 400 percent of the federal poverty level. As a result, in 2020, Maine employers couldn't enter into noncompetes with employees earning $49,960 or less.

Employers that wish to enter into noncompete agreements must give prospective employees notice before hiring. Additionally, noncompetes (except for certain physician agreements) can't take effect until one year after the employee's start date or six months from when the agreement was signed, whichever is later.