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Maryland Bars Non-Competes for Low-Wage Employees

Quick Hit: Effective October 1, 2019, Maryland law prohibits the use of non-competition agreements for employees with wages equal to or less than $15 per hour or $31,200 annually.

Key Takeaway:  Maryland employers, and employers with employees who work in Maryland, that utilize non-competition agreements for covered employees should be aware that such agreements are no longer enforceable in Maryland, but that non-disclosure agreements protecting proprietary information remain enforceable for such employees.  Affected employers should examine their restrictive covenant practices to ensure the law does not create competitive risks and, if so, consider ways to mitigate those risks such as changing low-wage employee access to information or increasing covered employees’ pay.

More Detail on Maryland Law Barring Non-Compete Agreements for Low-Wage Employees:

The Maryland law declares any “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 null and void as being against public policy of the State.”  The law specifically provides that its prohibition on non-competition agreements does not extend to “employment contract[s] or similar document[s] or agreement[s] with respect to the taking or use of a client list or other proprietary client-related information.”  The law is silent on the subject of agreements not to solicit customers or employees.

In enacting this legislation, Maryland has joined a growing national trend.  In recent years several other states, including Illinois, Maine, Massachusetts, New Hampshire, Oregon, Rhode Island and Washington, have passed laws restricting the use of non-competition agreements against low-wage employees.  In addition, state attorneys general have engaged in efforts to invalidate non-competition agreements against low-wage employees by bringing suits against individual employers.

© 2019 Proskauer Rose LLP.

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About this Author

Guy Brenner, Labor Attorney, Proskauer Rose, arbitration proceedings Lawyer
Partner

Guy Brenner is a partner in the Labor & Employment Law Department and co-head of the Non-Compete & Trade Secrets Group. He has extensive experience representing employers in both single-plaintiff and class action matters, as well as in arbitration proceedings. He also regularly assists federal government contractors with the many special employment-related compliance challenges they face.

Guy represents employers in all aspects of employment and labor litigation and counseling, with an emphasis on non-compete and trade secrets issues,...

202-416-6830
Caroline L. Guensberg Associate Labor & Employment Employment Litigation & Arbitration

Caroline Guensberg earned her J.D. from George Washington University Law School, graduating with honors. While attending law school, Caroline was a notes editor of the Federal Circuit Bar Journal and had her note published in the journal. Caroline was also a member of the Alternative Dispute Resolution Board and served as a writing fellow and a dean’s fellow. In addition, Caroline worked as a legal intern for the United States Equal Employment Opportunity Commission and the Federal Mine Safety Commission.

Prior to joining Proskauer, Caroline was a judicial clerk for the Connecticut Appellate Court. Caroline earned a B.A. in English Literature and Political Science from Wake Forest University.

202-416-5873