Maryland Prohibits Non-Compete Agreements with Certain Employees
October 09, 2019
In our recent articles, we have discussed the recent trend of weakening non-compete provisions. Many business owners regularly sign non-compete agreements with their employees. Maryland has now prohibited employers from entering into non-compete agreements with lower wage employees. Accordingly, businesses need to consider increasing their use of other restrictive provisions and increasing protection of their trade secrets and confidential information.
The new statute prohibits employers from entering into non-compete agreements with employees who earn equal to or less than $15.00 per hour or $31,200.00 annually. Non-compete agreements with such employees are now null and void as being against the public policy of the State. The statute is not limited to agreements made after the effective date of October 1, 2019. Any past non-compete agreement with an eligible employee may become unenforceable in Maryland as the law goes into effect.
The statute expressly excludes any contracts with respect to taking and using client lists or other private client-related information from its coverage. Therefore, a confidentiality agreement or a provision protecting an employer’s proprietary and confidential information is lawful under this statute. The statute also does not address non-solicitation agreements which may continue to be used to limit an employee from soliciting clients and employees from the employer to a competitor.
The statute does not provide an employee with any private right of action to sue his or her employer for violations of the law such as forcing an employee to enter into a prohibited non-compete agreement. However, an employer will not be able to enforce a non-compete agreement against such employees.
Moving forward, businesses should continue to use confidentiality provisions and non-solicit provisions with all employees. Trade secret and confidential information should be shared only with employees who have a need to know. However, businesses should limit use of non-compete provisions to higher paid employees, including those employees with unique skills and those employees in management.
1 Vasilios Peros is founder and principal of Law Office of Vasilios Peros, P.C. His practice is focused primarily on business, technology and intellectual property law. He has been recognized as one of Greater Baltimore’s top attorneys, including SmartCEO’s 2016 Centers of Influence, 2015 CPA + ESQs, 2014 Power Players, and Legal Elite in 2011, 2010 and 2009. He can be reached at (410) 274-2053 and VPeros@PerosLaw.com.
2 This article is provided for informational purposes only and should not be construed as a legal opinion or legal advice. The reader should not rely on this article in making business, legal or other decisions on any matter without first consulting an attorney regarding any such decision or undertaking.