Nondisclosure Provisions in Maine: Are Your Agreements Compliant?
In late 2022, a new Maine law took effect restricting the use and reach of nondisclosure provisions in Maine employment agreements. The new law, Nondisclosure Agreements in Employment, 26 M.R.S. § 599-C, is one of the most recent of similar state laws to be enacted that restrict an employer’s ability to limit an employee’s disclosures about claims of employment discrimination.
What Does the New Law Provide?
First, Section 599-C prohibits employers from entering into agreements with employees, interns, or applicants when the agreement waives, or in effect waives or limits, the worker’s right to report or discuss unlawful employment discrimination. The statute adopts the definition of unlawful employment discrimination from the Maine Human Rights Act, which includes discrimination on the basis of any protected characteristic, including race, color, sex, sexual orientation or gender identity, physical or mental disability, religion, age, ancestry, national origin, or familial status. The statute further specifies that workers must be protected in reporting or discussing discrimination or harassment at work or work-related events.
Second, Section 599-C prohibits employers from requiring an employee, intern, or applicant from entering into a settlement, separation, or severance agreement that limits the right to report, testify, or provide evidence to a federal or state agency that enforces employment or discrimination laws, prevents an individual from testifying or providing evidence in court proceedings in response to legal process, or prohibits reporting to a law enforcement agency.
Finally, Section 599-C provides that a settlement, separation, or severance agreement that includes a provision preventing disclosure of factual circumstances of a claim of unlawful employment discrimination must meet several discrete requirements: (a) it must contain separate monetary consideration for the provision in addition to anything the employee is already entitled to; (b) it must apply to all parties to the agreement; (c) it must clearly provide for the individual’s right to report, testify, or provide evidence to agencies that enforce employment and discrimination laws and testify and provide evidence in court proceedings; and (d) the employer must retain a copy of the agreement for six years following execution of the agreement or termination of the employment relationship, whichever is later, and keep it accessible for Department of Labor inspection.
How Will This Affect My Agreements?
Employers should consider how this new law impacts various types of employment agreements in their repertoire and make revisions to comply with Section 599-C:
- Nondisclosure/confidentiality provisions in offer letters or employment agreements: Given the breadth of Section 599-C, a standard confidentiality provision included in an offer letter or employment agreement could be interpreted to limit a worker’s rights under the statute. Confidentiality or nondisclosure provisions included as part of an offer letter or employment agreement should be amended to clearly state that the agreement does not prohibit workers from discussing or reporting prospective discrimination or harassment, regardless of whether the alleged conduct occurs at work or at a work-related event.
- Separation, severance, and settlement agreements: As noted above, Section 599-C expressly prohibits certain nondisclosure elements in separation, severance, and settlement agreements. Where the law and its implementation are still new, a best practice is to include specific carve-outs for permitted activity (as stated in the statute) in any nondisclosure or similar provisions.
- Provisions restricting disclosure of underlying factual circumstances: If you choose to include a restriction on the disclosure of factual circumstances underlying a discrimination claim, ensure all statutory prerequisites are met, including that appropriate consideration is provided and records are maintained according to the time period specified in the statute.
- Other considerations:
- For any agreement, keep in mind that a restriction need not be expressly classified as a “nondisclosure” provision to be covered by the new law. The substance of a provision is the determining factor. Employers should specifically review any non-disparagement provisions to make sure they are compliant with Section 599-C, as well.
- Consider what other laws may apply to an agreement. For example, the Speak Out Act will apply to nondisclosure and non-disparagement provisions in pre-dispute employment agreements (read more about the Speak Out Act here). In addition, a Maine employment agreement with noncompetition provisions will also need to comply with Maine’s law governing use of noncompetes.
It is always advisable to consult counsel regarding any employment agreements. For more information on Section 599-C, feel free to contact Emily Waddell, Liz Johnston, or another member of Verrill's Employment & Labor Group.