Maine’s Nondisclosure Agreements Law: New Limitations on Settlement, Separation, or Severance Agreements

Maine recently joined the list of states—including California, Illinois, New Jersey, New Mexico, New York, Oregon, Washington, and others—with laws restricting employers’ use of nondisclosure agreements (NDAs) and confidentiality terms in settlement, separation, and severance agreements. Governor Janet Mills signed H.P. 711—Legislative Document (L.D.) 965, “An Act Concerning Nondisclosure Agreements in Employment” into law on May 12, 2022, with the new measure set to take effect August 8, 2022. Not surprisingly, the recently enacted NDA law is somewhat vague and subject to interpretation.

Maine’s new NDA law prohibits employers from requiring applicants, interns, or employees to enter into settlement, separation, or severance agreements that:

• limit their rights to report, testify, or provide evidence to a federal or state agency that enforces employment or discrimination laws;
• prevent them from testifying or providing evidence in federal of state court proceedings in response to a legal process; or,
• prohibit them from reporting conduct to a law enforcement agency.

The new law further provides that settlement, separation or severance agreements may include provisions preventing the subsequent disclosure of factual information relating to a claim of unlawful employment discrimination only if:

• the agreement expressly provides for separate monetary consideration for the employee’s guarantee of nondisclosure that is in addition to any other compensation;
• all parties to the agreement are subject to the nondisclosure requirement;
• the agreement clearly states that the employee retains the right to report, testify, or provide evidence to federal and state agencies responsible for enforcing employment or discrimination laws, as well as the right to testify and provide evidence in federal and state court proceedings; and,
• the employer retains a copy of the agreement for six years from the date the agreement is executed or the end of employment, whichever is later.

Unlike comparable laws in several other states, Maine’s new NDA law clearly states that its restrictions and requirements do not apply to nondisclosure agreements protecting the confidentiality of proprietary information, trade secrets, or information that is otherwise confidential by law, rule, or regulation (i.e., standard confidentiality agreements that prohibit disclosure of confidential and/or proprietary information, and trade secrets).

The Maine Department of Labor is responsible for enforcement of the new NDA law, and employers that intentionally violate the newly enacted law are subject to fines of up to $1,000.00.

While the newly enacted law did not come with any complimentary guidance, we anticipate the Maine Department of Labor issuing guidance. In the interim, employers may want to consider reviewing their nondisclosure, separation, severance, and settlement agreements to ensure compliance with Maine’s new restrictions and requirements.

Ogletree Deakins’ Portland office will continue to monitor developments with respect to Maine’s law restricting the use of NDAs and will post updates on the firm’s Maine blog as additional information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.