What Maryland Employers Need to Know About New Law Prohibiting Non-Competes with Low Wage Earners

Earlier this year, Maryland became the most recent jurisdiction to enact legislation prohibiting non-competition agreements with certain “low” wage workers. The new law takes effect on October 1, 2019.

The new law prevents employers from entering into non-competition agreements or other types of non-competition arrangements with employees who earn equal to or less than $15 per hour or $31,200 annually. It specifies that for employees who earn equal to or less than the amounts described above, “a noncompete or conflict of interest provision in an employment contract or a similar document or agreement that restricts 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 shall be null and void as against the public policy of the State.”

By its terms, the law does not apply to employment contracts or a similar document or agreement with regard to the taking or use of an employer’s client list or other proprietary client-related information.

The law is silent as to whether it applies to other types of employment restrictions, such as a prohibition against the solicitation of employees and/or the solicitation of customers. The law also does not address whether prohibitions against current employees moonlighting (that is, working a separate job(s)) are permissible. Employers that have policies preventing or limiting “moonlighting” by employees should review them with experienced employment counsel for compliance with the new legislation.

In the short term, employers of all sizes should carefully review their existing noncompetition agreements as well as any other similar documents or agreements where noncompetition provisions exist in order to make appropriate modifications to address the new restrictions imposed by the new law. More broadly, employers should revisit with counsel what types of employment restrictions they actually need to further their legitimate business purposes and carefully tailor any such restrictions accordingly.

Marc Engel is an employment attorney experienced in providing successful strategies for managing employees and preventing employment claims. For more information, contact Marc at 301-657-0184 or [email protected].