Non-Compete Clauses in Maryland: Rules and Restrictions
Maryland's Dual Framework
Maryland uses both a statutory ban for certain workers and a common law reasonableness test for others. The Maryland Noncompete and Conflict of Interest Clause Act (Md. Code, Lab. & Empl. Section 3-716), effective October 2019, prohibits non-competes for lower-wage employees.
The Low-Wage Worker Ban
Non-compete agreements are void and unenforceable against employees who earn:
- Equal to or less than $15 per hour, or
- $31,200 or less annually
This threshold applies regardless of the employer's justification or the nature of the employee's work. Employers who attempt to enforce a non-compete against a covered employee may face penalties.
The Reasonableness Test for Other Workers
For employees above the income threshold, Maryland courts apply a common law reasonableness standard based on the framework from Ruhl v. F.A. Bartlett Tree Expert Co. and other decisions:
- The restriction must be no wider than necessary to protect the employer's legitimate interests
- Must be reasonable in time and geographic scope
- Must not place an undue hardship on the employee
- Must not be injurious to the public
- Must be supported by adequate consideration
Duration and Geography in Maryland
- Duration: Maryland courts have upheld one to two year non-competes in various contexts. The appropriate length depends on the industry, the employee's access to sensitive information, and the nature of customer relationships.
- Geography: Must correspond to the employer's competitive area and the employee's scope of work. Maryland's proximity to Washington, D.C. and Virginia creates multi-jurisdictional complexities that courts may consider.
Reformation
Maryland courts have exercised limited reformation authority, narrowing overbroad terms in some cases. However, this power is not guaranteed, and courts may decline to reform agreements they view as fundamentally overreaching.
Red Flags
- Applied to employees earning $15/hour or less
- Duration exceeding two years
- Geographic scope not matching the employee's actual territory
- No identified legitimate business interest
- Restrictions that effectively ban the employee from their entire profession
When to Consult a Lawyer
Consider consulting a Maryland employment attorney if you earn below the statutory threshold and are being asked to sign a non-compete, if you are unsure whether your agreement is enforceable, or if you are facing enforcement action. Maryland's multi-state metro area also raises choice-of-law questions worth discussing with counsel.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.