Non-compete agreements are often used by employers or businesses to prevent workers from taking employment with a competitor or setting up a competing firm for a period of time after leaving work. Non-compete agreements are allowed in Maryland. Courts will enforce non-compete agreements that are reasonably drawn to protect the interest of the employer, and in securing the right of employees to pursue work in an open labor market. Certain legislation forbids non-compete agreements for low-wage employees.
Is a Non-Compete Agreement Legally Enforceable in Maryland?
For over 100 years, Maryland courts have upheld non-compete agreements. However, courts have always scrutinized them closely to ensure that they are narrowly drafted. Maryland courts are quite willing to overturn a non-compete agreement that places too great a geographic restriction on the ability of an employee to seek work in his field. An agreement of too long a duration will also be overturned.
In contrast, the State of Maryland has, in recent legislation, emphatically permitted non-compete provisions that forbid the taking of client and customer lists. However, the law is silent on similar non-compete provisions which forbid the solicitation of customers.
What can be protected?
In Maryland, a non-compete agreement can be used to protect trade secrets, established customer relationships and client lists, and unique services. It can also be used to protect and promote business goodwill.
Reasonable Uses and Objections
- Enforceable when terminated without cause? Yes
- Employee non-solicitation agreement permitted? Yes
- Customer non-solicitation agreements permitted? Yes
- Does continuing employment equal sufficient consideration? Yes, but may be held to constitute duress.
- Statute of Limitation for breach of contract: 3 years
Maryland Non-Compete Limitations:
Time limitations:
The Maryland Court of Appeals and Court of Special Appeals will carefully scrutinize non-compete agreements to ensure they are carefully drawn both to protect the interests of the employer and the right of the worker to participate in the labor market. In 2017, the United States District Court for Maryland, after an examination and application of state law held that a non-compete agreement with a duration of five years was unenforceable, both because the employer could not cite any compelling interest for such a long period of time, and because the employer could not cite any Maryland case law in which an agreement with a five-year duration was upheld. [1]
Geographical limitations:
Maryland courts have consistently found that any non-compete agreement must be narrowly tailored as to geographical area, and extend no further than is “reasonably necessary for the protection of the business of the employer and do not impose undue hardship on the employee or disregard the interests of the public.” [2]
Other limitations:
In 2019, a statute banned certain non-compete agreements. Non-compete agreements may not be required of any employees making less than $15 per hour or $31,200 per year. Existing agreements made before the effective date of the statute, 1 October 2019, were not grandfathered in, and are also unenforceable. [3]
Maryland Non-Compete Agreement Sample
This template of a Maryland non-compete agreement will let you draft up-to-date contracts for your business clearly, simply, and inexpensively.
Non-Compete Agreement
