Non-compete Enforcement: What Employers Need to Know about the Latest Employment Law in Maryland

According to the latest employment law in Maryland that came into effect on October 1, 2019, employers are banned from requiring lower-wage employees to sign non-compete agreements. This means that workers with an hourly wage of less than $15 or a yearly pay below $31,200 would be able to work for a former employer’s competition.

A Little Background: What Non-compete Agreements Really Are

Non-compete agreements require employees to agree that they won’t work for a competing employer for a certain period after quitting a job at one company.

These agreements are aimed at protecting an employer’s confidential information and trade secrets. They make sure an employer doesn’t have to worry about unfair competition from a former employee. Such as going to work for a competitor or launch a rival business.

Non-compete agreements in Maryland are based on the idea that former employees have the power to exploit confidential and sensitive information about their former employer’s business. This could include operations knowledge and practices, customers, products, as well as marketing strategies. They can easily gain a competitive edge in the industry by leveraging customer connections built through their employer’s time and expense.

The Pushback from Workers

Employees believe that non-compete agreements could be unreasonable. They argued that these agreements limit their ability to support themselves and interfered with their freedom to contract.

Courts, on the other hand, ruled that there was nothing wrong with the enforcement of non-compete agreements as long as they don’t cover a wide geographical area or stretch too far in the future.

While employers continued to use non-compete agreements in Maryland and several other states, the trend of limiting their use started gaining popularity.

The Latest Non-compete Law in Maryland

The Maryland bill against the enforcement of non-compete agreements became the law on May 25th, 2019. It passed both the houses of the state legislature and automatically became the law without the governor’s signature since he didn’t use his veto power.

So, Maryland’s Senate Bill 328 forbids employers from requiring their workers to enter non-compete agreements if they earn less than $15 per hour or $31,200 a year. It is important to note that the statute expressly reserves the rights of employers to enforce any employment contract that protects client lists or any other proprietary piece of information related to customers.

Please note that the statute doesn’t address other restrictive covenants like non-solicitation agreements for workers. It is also noteworthy that the latest non-compete law in Maryland doesn’t highlight any penalties for employers for violating the law. It also doesn’t present an enforcement scheme or provide the workers with a private right of action.

Employer Enforcement of Non-compete Agreements in Maryland

Apart from the legalities, there have always been some strategic issues regarding employer enforcement of non-compete agreements.

Generally, filing a lawsuit against a worker who violates a non-compete agreement can be expensive. Many employers hesitate to pay large legal fees. Nevertheless, many employers welcome an opportunity to take such an action in order to set an example for the rest of the employees so that nobody even thinks of taking clients with them when they leave their jobs.

Other employers are extra careful in taking action against a former employee who violates a non-compete agreement, especially if the time and geographical restrictions aren’t clear.        

Consult with an Experienced Employment Attorney near Baltimore

Non-compete agreements raise a number of issues. You need to pay extra attention when analyzing such clauses. If you have had your workers sign an agreement and are confused about its enforceability, you must consult with a qualified and experienced Maryland employment attorney today.  

Luchansky Law is here to help you out with matters related to non-compete enforcement in Maryland.  

Our team of employment law attorneys has extensive experience working with employers to draft and review non-compete agreements. We truly understand how crucial it is to protect your business information and trade secrets. Our counseling and litigation services will help you keep your client lists, proprietary information, and customer relationships safe.

If you’re looking for advice on current policies or want to sign up for expert litigation representation, you can count on us! For us, your interests and satisfaction are our top priorities. We’ll walk you through the entire process and answer all your questions to ensure maximum peace of mind. Schedule an initial consultation with one of our specialists today!

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