Mid-Atlantic Health Law TOPICS
Maryland Non-Compete Ban
During its 2024 session, the Maryland legislature amended the State’s existing law governing non-competes to expand restrictions on their use. The amendment is part of a push against the perceived effects of private equity investment in the health care and veterinary industries.
What types of provisions are subject to the law?
Non-competes, conflict of interest provisions and other agreements that restrict the ability of a protected employee to enter into employment with a new employer or to become self-employed in the same or similar business or trade are deemed null and void under the law.
Which employees are protected by the law’s current restrictions?
Maryland’s non-compete law currently bans all non-competes for employees earning less than 150% of the State minimum wage.
Which employees will be protected by the new restrictions?
The 2024 amendments to the law expand the ban on non-compete provisions to include agreements with:
- Licensed health care providers who provide direct patient care and earn total annual compensation equal to or less than $350,000; and
- Employees who are licensed as a veterinarian or veterinary tech. (There is no salary cap limiting coverage for veterinary employees).
For the purposes of this law, licensed health care providers include any person who must be licensed under Maryland’s Health Occupations Code, for example, physicians, nurses, dentists, optometrists, physician assistants, nurse practitioners, pharmacists, physical therapists, psychologists, and social workers.
Are there still limits on non-competes with health care employees making over $350,00?
Non-compete provisions in agreements with health care workers who make more than $350,00 annually are subject to new restrictions. Such provisions will be restricted in duration to one year from the last date of employment and may not exceed 10 miles from the primary place of employment.
The law also requires that on request of a patient, an employer must provide notice of the new location where the former highly-paid employee will be practicing.
What about sales of practices?
The Maryland prohibition on non-compete provisions does not contain an explicit exception for a non-compete that is entered into by a person pursuant to a bona fide sale of a business.
However, the law prohibits non-compete provisions found “in an employment contract or a similar document or agreement.” Therefore, it is quite possible that a non-compete provision in a purchase agreement is not banned in Maryland.
When does the law become effective?
The new restrictions on non-compete provisions with veterinary employees became effective on June 1, 2024. The restrictions on non-compete provisions with health care providers become effective on July 1, 2025.
However, the Maryland restrictions apply only prospectively. A provision applying the new Maryland restrictions retroactively was
deleted from the final bill.
Charles R Bacharach
410-576-4169 • cbacharach@gfrlaw.com