Maine Legislature Takes Aim at Nondisclosure Agreements

After passing more than 500 bills in 2019, including those mandating paid leave and placing limits on noncompete agreements, the Maine Legislature reconvened on January 8, 2020, and directed its attention to nondisclosure agreements.

During the first regular session of the 129th legislature, both the House of Representatives and the Senate passed Legislative Document 1529 (L.D. 1529) (An Act Concerning Nondisclosure Agreements in Employment). However, on June 19, 2019, the eve of the session’s adjournment, the House recalled the bill from Governor Janet Mills’s desk before she could act on it.

The bill, which is now up for reconsideration in the second session of the 129th legislature, would dramatically alter the ability for employers to use nondisclosure agreements in releases and contracts.

As passed in the first session in June, the amended version of L.D. 1529 would prohibit an employer from requiring

an employee, intern, applicant for employment or applicant for internship to enter into a contract with the employer that contains a nondisclosure agreement, nondisparagement agreement, waiver or other provision that prevents the employee, intern or applicant from disclosing or discussing discrimination, including harassment, occurring in the workplace or at work-related events coordinated by or through the employer.

L.D. 1529 also would extend those limitations to settlement, separation, and severance agreements by prohibiting an employer from including provisions that prevent “the disclosure of factual information relating to a claim of discrimination, including harassment, unless the employee, intern or applicant requests such a provision.” The bill also would not allow these agreements to “explicitly or implicitly limit an individual’s ability to provide testimony or evidence or make reports to any federal or state agency that enforces employment or discrimination laws, including, but not limited to, the Maine Human Rights Commission and the Department of Labor.”

Additionally, L.D. 1529 would mandate that anyone executing any type of agreement containing nondisclosure provisions be granted 21 days to consider the agreement before signing, as well as a 7-day window to revoke the agreement after its execution. The bill also would direct employers to retain a copy of any such agreement for six years following the execution of the agreement or the end of employment, whichever is later.

The bill would task the Maine Department of Labor with enforcement and calls for fines of up to $1,000 per violation paid to the state and liquidated damages of three times the amount of the total fines to the individual affected by any violations.

L.D. 1529 is currently with the House Committee on Labor and Housing for work sessions. The legislature may try to limit the scope of the bill’s broad restrictions and make them applicable only to certain employers. However, the issue will likely come to another vote before the legislature adjourns in April.

Although what ultimately heads for the governor’s signature is still murky, it is clear that Maine will limit nondisclosure agreements in some fashion. That means employers may want to reevaluate their contracts and agreements to make sure any nondisclosure provisions are not overly broad or restrictive.