CLIENT ALERT
Maine Enacts Ban on Non-Compete Agreements for Health Care Practitioners
By Attorney Jason Gregoire
Maine has enacted sweeping new restrictions on the use of non-competes in the health care industry. On April 15, 2026, Governor Janet Mills signed L.D. 2200 into law. L.D. 2200 amends Maine’s existing non-compete law, 26 M.R.S.A. § 599-A, to prohibit employers from entering into or enforcing post-termination non-compete agreements with licensed health care practitioners who do not have an ownership interest in the employer’s business. This legislation was promoted as a measure intended to improve health care workforce mobility and increase access to care, particularly in rural communities. It also reflects the continuing national trend toward heightened scrutiny of restrictive covenants in health care.
Overview
The law prohibits employers from entering into, or attempting to enforce, “noncompete agreements” with “health care practitioners”. The law defines “noncompete agreement” as “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.” (emphasis added). The law defines “healthcare practitioner” broadly as any “individual qualified or licensed under [Maine] law to perform or provide healthcare services in [Maine]”. This expansive definition covers many provider types including, but not limited to, physicians, nurses, nurse practitioners, physician assistants, dentists, psychologists, physical therapists, and social workers.
The law applies to all non-competes entered into, or in current contracts that renew, on or after July 13, 2026. Accordingly, if a current contract contains a non-compete, and also contains a term renewal provision (e.g., automatic renewal each year), it appears that the next term renewal following July 13, 2026 will serve to invalidate the non-compete. Any employer that violates the law will be deemed to have committed a civil violation and face a fine of not less than $5,000 from the Maine Department of Labor.
Permissible Restrictive Covenants?
This law does not prohibit all forms of restrictive covenants. Employers may still utilize other tools to protect confidential information and business goodwill. Subject to careful drafting and applicable law, employers may still consider the use of:
- Non-competes that apply during the term of employment;
- Non-competes entered into in connection with the sale of business;
- Non-competes with employees who also hold an “ownership interest” in the employer such as a shareholder of a professional corporation or a member of a professional limited liability company;
- Confidentiality agreements;
- Trade secret protections;
- Employee non-solicitation provisions; and
- Patient or referral source non-solicitation provisions.
Notwithstanding the above, employers should carefully evaluate whether any restriction imposed upon an employee will be construed as a de facto “noncompete agreement”.
Action Steps
Health care organizations with Maine operations and Maine-based health care employers should consider taking the following actions in response to this legislation:
- Conduct a comprehensive audit of existing agreements containing restrictive covenants;
- Review and revise employment and independent contractor agreement templates;
- Strengthen non-solicitation, confidentiality and trade secret protection provisions;
- Re-evaluate retention strategies that depend on post-employment non-compete restrictions; and
- Train management, recruiting, and human resources personnel on these new restrictions.
Conclusion
Maine’s enactment of a health care non-compete ban significantly changes the legal landscape for provider employment and retention arrangements within the state. Health care employers, practice groups, and investors should proactively review existing agreements and operational practices to assess compliance and reduce enforcement risk. Careful drafting and strategic planning remain essential as courts and regulators continue to scrutinize restrictive covenant practices in the health care industry.
Sheehan Phinney’s Healthcare Practice Group
Jason serves as Chair of the firm’s Healthcare Practice Group. Our Healthcare team combines extensive knowledge of federal and state healthcare laws with seasoned counseling gained from decades of practice. We have served hospitals, long-term care facilities, CCRCs, home health and hospice agencies, FQHCs, substance use treatment facilities, mental health centers, professional practices, and individual practitioners – advising on their full scope of healthcare needs.
This Client Alert is provided for informational purposes only and does not constitute legal advice or establish an attorney-client relationship. Readers should not act upon the information contained in this alert without seeking advice from qualified counsel. Prior results do not guarantee similar outcomes.