In today’s highly competitive marketplace, more and more employers are turning to non-compete agreements to protect themselves. However, Maryland is one of the most restrictive states in the country when it comes to non-compete agreements. If you use non-compete agreements to protect your business interests, you need to know where the limits are before a conflict arises. Otherwise, you may expose critical vulnerabilities that could have been protected with careful planning. A Maryland employment lawyer can work with you to develop non-compete agreements that are fair, enforceable and provide your business with the protection you need.
The bulk of the law governing non-compete agreements in the state of Maryland is derived from a series of complex court decisions. However, as an initial matter, you should be aware of one law that provides some straightforward guidance for employers. Finalized in May 2019 and effective the following October, the Maryland Non-Compete and Conflict of Interest Clauses Act prohibits using non-compete clauses for employees who earn $15 per hour or less or $31,200 annually. Here are a couple of other important notes about the law:
Any non-compete clause in violation of this law will be considered null and void, even if voluntarily entered into by the employee.
In Maryland, the courts have adopted a two-part threshold test to determine whether non-compete clauses are appropriate:
If the business meets both of those criteria, the court will look to whether your non-compete clause is reasonable. Obviously, people can disagree over what may be considered reasonable, especially when a former employee is trying to pursue a lucrative opportunity with one of your competitors. An experienced Maryland employment lawyer can work with you to draft reasonable non-compete clauses that will be deemed enforceable in the event of a challenge.
Most non-compete clauses have two principal restrictions:
Again, the law on whether non-compete clauses are enforceable is complex, and the outcome often depends on the case’s unique facts before the court. That said, the courts will generally consider a non-compete clause reasonable of up to two years. They will also consider a geographic restriction as reasonable if it matches the employer’s business territory. That said, there are exceptions. A Maryland employment lawyer can help prevent challenges and defend you if your non-compete clause is challenged.
When entering into a contract with an employee , here are some additional factors to consider when deciding whether a non-compete agreement would be appropriate:
The undue hardship factor is important. If a court finds that the non-compete clause imposes an undue hardship, it will find the clause unreasonable and therefore unenforceable. Examples of undue hardships are a forfeiture of pensions or other vested benefits or forcing the employee to work in a different industry for significantly less money.
The law surrounding non-compete agreements is extraordinarily complex. Unfortunately, many employers rely on one-size-fits-all form employment contracts that may not provide the protection they need, or even worse, may be deemed unenforceable in the State of Maryland. Maryland employment lawyer J.W. Stafford works with businesses of all sizes to help them develop employment contracts that meet their unique needs and goals. Whether you need a non-compete agreement or a confidentiality agreement , he has the knowledge, skill, and experience you need. Contact us today at (410) 514-6099 to schedule a consultation to discuss your needs and how we can help.
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