Are Employee Non-Competes Enforceable in Maryland?

Non-compete agreements provide a way for companies to protect their business interests in a wide range of circumstances. However, while companies can use non-competes legitimately, many companies also overreach. This is especially true in the employment context. Learn more from Maryland employment lawyer Jamaal “Jay” W. Stafford.

Employee Non-Competes Are Enforceable in Some Circumstances

As a general rule, non-compete agreements are enforceable in Maryland. There is no general policy against enforcement, and the courts recognize that non-compete agreements can be valid tools for protecting legitimate business interests.

However, to be enforceable, a non-compete agreement must meet certain requirements. Additionally, as we discuss below, while non-compete agreements are generally enforceable in Maryland, there are exceptions—including exceptions that apply specifically to current and former employees.

When use of a non-compete agreement is permissible, the agreement must meet the following requirements in order to be enforceable under Maryland law:

• It must be reasonable in duration;
• It must be reasonable in geographic scope; and,
• It must be reasonable in the types of activities it restricts.

Generally speaking, this means that a non-compete agreement must be limited in both duration and geographic scope (i.e., extending for two years from the date of termination and applying only in Baltimore County). It also means that it must be tailored to restricting activity that is truly competitive with a company’s business.

Non-Compete Restrictions that Apply Specifically to the Employer-Employee Relationship in Maryland

While Maryland law generally allows the use of reasonable non-competes, there are restrictions that apply in the employment context. One of these restrictions has been in place for a while now, while the other was added to the Maryland Code just last year. Under Section 3-716 of the Maryland Code:

Certain Employee Non-Competes Are Void as a Matter of Public Policy

Subsection 3-716(a) of the Maryland Code provides that certain employee non-competes “shall be null and void as being against the public policy of the State.” These include non-competes that “restrict[] the ability of an employee to enter into employment with a new employer or to become self–employed in the same or similar business or trade” under the following circumstances:

• The employee earns equal to or less than 150 percent of Maryland’s minimum wage;
• The employee is a licensed healthcare practitioner who provides direct patient care and earns equal to or less than $350,000 per year; or,
• The employee is a licensed veterinary practitioner or veterinary technician.

If an employee in Maryland falls into one of these three categories, then it is unlawful for an employer to enforce a non-compete against that employee. This is true regardless of when and where the non-compete agreement was signed.

Certain Other Employee Non-Competes Are Subject to Additional Restrictions

Along with prohibiting the enforcement of non-compete agreements against the employees listed above, Section 3-716 of the Maryland Code also restricts the enforcement of non-competes against licensed healthcare practitioners who earn more than $350,000 annually. Under subsection 3-716(b), a non-compete agreement is only enforceable against a licensed healthcare practitioner who earns more than $350,000 if:

• The duration of the non-compete does not exceed one year from the employee’s last day of employment; and,
• The geographical restriction in the non-compete is limited to 10 miles from the employee’s primary place of employment.

If a covered healthcare practitioner’s non-compete does not meet both of these requirements, then it may be subject to revision under Maryland’s “blue pencil” rule. This rule generally allows courts in the state to modify contract terms in order to make them legally enforceable.  

Is Your Employer (or Former Employer) Attempting to Enforce an Unenforceable Non-Compete?

While Maryland’s restrictions on employee non-competes are clear, this doesn’t mean that employers always respect them. If your employer (or former employer) is attempting to enforce an unenforceable non-compete, what should you do?

In this situation, you will want to consult with an experienced Maryland employment lawyer promptly. While your legal rights are clear, protecting them can prove challenging. You will also want to be careful when communicating with your new employer to make sure you do not unnecessarily jeopardize your new position. If you need help, we encourage you to contact us for more information.

Schedule a Confidential Consultation with an Experienced Maryland Employment Lawyer

To speak with an experienced Maryland employment lawyer at The Law Firm of J.W. Stafford about your situation in confidence, call us at 410-514-6099 or tell us how we can reach you online. We will schedule your confidential consultation as soon as possible.