Employee Non-Compete Agreement and Enforceability Memo — Maryland

MARYLAND Employee Non-Compete Agreement and Enforceability Memo

Quick-Reference Summary

PART A — ENFORCEABILITY MEMO

MEMORANDUM

TO: [CLIENT / EMPLOYER]
FROM: [ATTORNEY]
DATE: [__/__/____]
RE: Enforceability of Employee Non-Competition Agreement Under Maryland Law
PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION / WORK PRODUCT

I. Executive Summary

Maryland combines a narrow statutory ban (Md. Code Ann., Lab. & Empl. § 3-716) targeting (a) low-wage workers, (b) veterinarians/veterinary technicians, and (c) most direct-patient-care healthcare workers, with traditional common-law reasonableness analysis for all other employees. The statute was amended in 2023 (tying the low-wage threshold to 150% of the state minimum wage) and again in 2024 (HB 1388, adding veterinary and healthcare bans; healthcare provisions effective July 1, 2025). Outside the statute, Maryland common law applies a multi-factor reasonableness test under Becker v. Bailey, 268 Md. 93 (1973). Maryland is a "blue-pencil" jurisdiction with limited reformation authority.

II. Statutory Framework — Md. Code Ann., Lab. & Empl. § 3-716

A. Low-Wage Worker Ban (§ 3-716(a)(1)(i)1)

Non-compete and conflict-of-interest provisions are null and void against any employee who earns ≤ 150% of the Maryland minimum wage under § 3-413.

Verify current minimum wage before applying. The threshold updates automatically with minimum-wage adjustments.

B. Veterinary Ban (§ 3-716(a)(1)(i)3, eff. June 1, 2024)

Non-competes are void against veterinary practitioners and veterinary technicians licensed under Title 2, Subtitle 3 of the Agriculture Article, regardless of compensation.

C. Healthcare Worker Ban (§ 3-716(a)(1)(i)2, eff. July 1, 2025)

Non-competes are void against employees who are:

1. Required to be licensed under the Maryland Health Occupations Article (e.g., physicians, PAs, NPs, nurses, dentists, pharmacists, psychologists, optometrists);

2. Employed in a position providing direct patient care; AND

3. Earn ≤ $350,000 in total annual compensation.

D. Higher-Earning Healthcare Workers (§ 3-716(b), eff. July 1, 2025)

For licensed direct-patient-care providers earning more than $350,000:

• Non-compete period may not exceed 1 year from last day of employment;
• Geographic restriction may not exceed 10 miles from primary place of employment;
• On patient request, employer must provide notice of physician's new location.

E. Carve-Out (§ 3-716(a)(2))

The statute does NOT apply to agreements restricting "the taking or use of a client or patient list or other proprietary client-related or patient-related information." Thus:

• NDAs remain enforceable;
• Customer/client non-solicits that protect client lists remain enforceable;
• Trade-secret protections remain enforceable;
• Even for employees who fall within the statutory bans, the employer can still protect proprietary client/patient information.

III. Common-Law Reasonableness (Employees NOT Banned by Statute)

For employees outside the statutory bans, Maryland courts apply a reasonableness test:

1. Legitimate business interest — trade secrets, confidential information, customer goodwill, or "unique services";
2. Reasonable duration — typically 1–2 years; up to 3 years enforced on strong facts (Holloway v. Faw, Casson & Co., 319 Md. 324 (1990));
3. Reasonable geographic scope — tailored to the employer's territory and employee's role;
4. No undue hardship on the employee;
5. Not contrary to the public interest;
6. Supported by adequate consideration — continued employment is sufficient if Employee remains employed for a "substantial period" after signing (Simko, Inc. v. Graymar Co., 55 Md. App. 561 (1983)).

IV. Modification — Blue Pencil

Maryland courts have authority to "blue pencil" overbroad provisions, including modifying them to make them reasonable. Deutsche Post Global Mail, Ltd. v. Conrad, 292 F. Supp. 2d 748 (D. Md. 2003). However, narrow drafting from the outset is the safer practice.

V. Attorney Non-Competes

Md. Rule of Prof'l Conduct 5.6 prohibits non-competes restricting an attorney's right to practice law, except agreements concerning retirement benefits and certain settlement-context agreements.

VI. Trade Secrets

The Maryland Uniform Trade Secrets Act (Md. Code Ann., Comm. Law § 11-1201 et seq.) provides parallel protection for trade secrets independent of contract.

VII. FTC Non-Compete Rule Status

Vacated nationwide by Ryan LLC v. FTC (N.D. Tex. Aug. 20, 2024). FTC abandoned appeal Sept. 5, 2025. Not in effect.

VIII. Drafting Recommendations

☐ Confirm Employee's annual compensation against current 150%-of-minimum-wage threshold ($46,800 at $15.00 min wage).
☐ Confirm Employee's licensure and role: veterinary professionals categorically banned; direct-patient-care healthcare workers ≤ $350,000 categorically banned (effective July 1, 2025).
☐ For high-earning healthcare (>$350,000): cap at 1 year and 10-mile radius; build in patient-notice procedure.
☐ For all others: limit duration to 1–2 years; tailor geography; document legitimate business interest.
☐ Even for banned categories, pair with NDA, customer/client non-solicit, and proprietary information clauses (carve-out under § 3-716(a)(2)).
☐ Provide additional consideration for mid-employment agreements.
☐ Use Maryland choice of law and venue.

PART B — NON-COMPETE AGREEMENT

THIS NON-COMPETE AGREEMENT (this "Agreement") is entered into as of [__/__/____] (the "Effective Date"),

by and between:

EMPLOYER:
Name: [________________________________]
Address: [________________________________]
City/State/ZIP: [________________________________]
(the "Company")

and

EMPLOYEE:
Name: [________________________________]
Address: [________________________________]
City/State/ZIP: [________________________________]
Position: [________________________________]
Annual Compensation: $[________] (must exceed 150% of MD minimum wage, currently ~$46,800; verify)
Licensure (if any): ☐ None ☐ Health Occupations Article ☐ Veterinary (Agriculture Article) ☐ Other: [____]
Direct Patient Care: ☐ Yes ☐ No
(the "Employee")

STATUTORY CARVE-OUT CHECK — Md. Code Ann., Lab. & Empl. § 3-716:

☐ Employee earns MORE than 150% of MD minimum wage (confirmed).
☐ Employee is NOT a veterinary practitioner or veterinary technician.
☐ If Employee is licensed under Health Occupations Article AND provides direct patient care: Employee earns MORE than $350,000/year (otherwise non-compete is void effective July 1, 2025; use non-solicit + NDA only).
☐ If Employee is high-earning healthcare (>$350,000): non-compete limited to 1 year and 10-mile radius (Section 5 below).

RECITALS

WHEREAS, the Company is engaged in the business of [________________________________] (the "Business");

WHEREAS, Employee will have or has had access to the Company's trade secrets, Confidential Information, and customer relationships that constitute legitimate business interests under Maryland law;

WHEREAS, this Agreement complies with Md. Code Ann., Lab. & Empl. § 3-716 and the Maryland common-law reasonableness standard articulated in Becker v. Bailey, 268 Md. 93 (1973);

NOW, THEREFORE, in consideration of the mutual promises herein, the Parties agree:

SECTION 1 — DEFINITIONS

1.1 "Confidential Information" means non-public, proprietary, or trade-secret information of the Company, including customer/client lists and proprietary client-related information (which, per § 3-716(a)(2), remain protectable even for employees who fall within the statutory non-compete bans). Consistent with Md. Code Ann., Comm. Law § 11-1201 et seq.

1.2 "Customer" means any person or entity that (a) was a customer or client of the Company during the [12]-month period preceding Employee's termination AND (b) with whom Employee had material contact OR about whom Employee had access to Confidential Information.

1.3 "Restricted Period" means the period commencing on Employee's cessation of employment for any reason and continuing for:

☐ Six (6) months
☐ Twelve (12) months (recommended)
☐ Eighteen (18) months
☐ Twenty-four (24) months (requires strong factual justification)
☐ For licensed direct-patient-care healthcare workers >$350,000: twelve (12) months MAXIMUM per § 3-716(b)(2)(i)

1.4 "Geographic Area" means:

☐ Option A — Defined Territory: [Counties/states] [________________________________]
☐ Option B — Customer-Based: Areas where Employee provided services or had Customer contact during the [____]-month period preceding termination
☐ Option C — Radius: A [____]-mile radius from [________________________________]
☐ For licensed direct-patient-care healthcare workers >$350,000: a 10-mile radius from primary place of employment MAXIMUM per § 3-716(b)(2)(ii)

1.5 "Restricted Activities" means engaging in services for a Competing Business that are substantially similar to those Employee actually performed during the [12]-month period preceding termination.

1.6 "Competing Business" means any business providing [products/services substantially similar to] [________________________________] in the Geographic Area.

SECTION 2 — COVENANTS

2.1 Non-Competition. During the Restricted Period, Employee shall not engage in the Restricted Activities for a Competing Business within the Geographic Area.

2.2 Customer Non-Solicitation. During the Restricted Period, Employee shall not directly or indirectly solicit or accept business from any Customer.

DRAFTER'S NOTE: Per § 3-716(a)(2), restrictions on use of client/patient lists or proprietary client information are NOT covered by the statutory bans and remain enforceable even against low-wage and most healthcare workers. This is a critical fallback.

2.3 Confidentiality. Employee shall not disclose or use Confidential Information for any purpose other than the Company's business, during or after employment.

2.4 Employee Non-Solicitation. During the Restricted Period, Employee shall not directly or indirectly solicit for employment any employee of the Company who possessed access to Confidential Information or had material customer-relationship responsibilities.

SECTION 3 — CONSIDERATION

☐ New Hire: The Company's offer of employment is sufficient consideration under Maryland law.

☐ Mid-Employment: Employee receives the following in exchange for this Agreement: [________________________________] (e.g., signing bonus of $[____], salary increase, equity grant, promotion, severance commitment), in addition to continued employment for a substantial period after signing (per Simko, Inc. v. Graymar Co., 55 Md. App. 561 (1983)).

SECTION 4 — LEGITIMATE BUSINESS INTERESTS

The Company has documented legitimate business interests in (a) trade secrets and Confidential Information; (b) customer goodwill and relationships; (c) specialized training; and (d) unique services rendered by Employee.

SECTION 5 — STATUTORY COMPLIANCE (HEALTHCARE >$350K)

If Employee is required to be licensed under the Maryland Health Occupations Article and provides direct patient care AND earns more than $350,000 in total annual compensation, the following apply per Md. Code Ann., Lab. & Empl. § 3-716(b):

(a) The Restricted Period shall NOT exceed one (1) year from the last day of employment;

(b) The Geographic Area shall NOT exceed ten (10) miles from Employee's primary place of employment, which is [________________________________];

(c) Patient Notice: On request of a patient, the Company shall provide notice of the new location where Employee will be practicing.

SECTION 6 — SEVERABILITY AND BLUE PENCIL

6.1 Each covenant and each component is severable and independently enforceable.

6.2 Per Deutsche Post Global Mail, Ltd. v. Conrad, 292 F. Supp. 2d 748 (D. Md. 2003), Maryland courts have authority to blue-pencil and modify overbroad provisions. The Parties consent to such modification to the minimum extent necessary to render any unenforceable provision valid.

6.3 Step-Down Duration. If the Restricted Period of [____] months is unenforceable, the Parties intend the period to be 12 months, then 6 months, then 3 months, in descending order.

6.4 Statutory Severability. If any provision is rendered void by § 3-716, that provision shall be severed and the remaining provisions (including, per § 3-716(a)(2), restrictions on client/patient lists and proprietary information) shall remain in full force and effect.

SECTION 7 — REMEDIES

7.1 Employee acknowledges breach would cause irreparable harm; the Company may seek injunctive relief.

7.2 Prevailing party recovers reasonable attorneys' fees and costs to the extent permitted by law.

SECTION 8 — GENERAL

8.1 Governing Law. Maryland law governs without regard to conflicts principles.

8.2 Forum. Courts in [____ County], Maryland have exclusive jurisdiction.

8.3 Entire Agreement; Amendment. This is the entire agreement; amendments require writing signed by both Parties.

8.4 Assignment. Company may assign to successors; Employee may not.

SIGNATURES

COMPANY:

EMPLOYEE:

PART C — PRE-SIGNING CHECKLIST

☐ Threshold check — § 3-716 statutory bans:
☐ Employee's annual compensation exceeds 150% of MD minimum wage (~$46,800 at $15.00 min wage).
☐ Employee is NOT a veterinary practitioner or veterinary technician.
☐ Employee is NOT a licensed-direct-patient-care healthcare worker earning ≤ $350,000 (eff. July 1, 2025).
☐ For high-earning healthcare workers (>$350,000): Restricted Period ≤ 1 year; Geographic Area ≤ 10-mile radius; patient-notice procedure documented.
☐ For non-banned employees: documented legitimate business interest; duration 1–2 years; geography tailored.
☐ Even if non-compete is statutorily void, include NDA, customer/client non-solicit, proprietary information protection (carve-out under § 3-716(a)(2)).
☐ For mid-employment agreement: additional consideration documented.
☐ Maryland choice of law and venue.
☐ Step-down/severability provisions included.
☐ If Employee is a lawyer: confirm Md. Rule of Prof'l Conduct 5.6 compliance (most non-competes barred).
☐ Copy delivered to Employee for records.

Sources and References

• Md. Code Ann., Lab. & Empl. § 3-716 — Maryland General Assembly
• Md. Code Ann., Lab. & Empl. § 3-413 (Minimum Wage) — Maryland General Assembly
• HB 1388 (2024 session) — Noncompete and Conflict of Interest Clauses for Veterinary and Health Care Professionals — Maryland General Assembly
• Becker v. Bailey, 268 Md. 93 (1973) — Justia
• Holloway v. Faw, Casson & Co., 319 Md. 324 (1990) — Justia
• Simko, Inc. v. Graymar Co., 55 Md. App. 561 (1983) — Maryland Reports
• Deutsche Post Global Mail, Ltd. v. Conrad, 292 F. Supp. 2d 748 (D. Md. 2003) — Justia
• Md. Lawyer's Rule of Professional Conduct 5.6 — Maryland Judiciary
• Maryland Uniform Trade Secrets Act, Md. Code Ann., Comm. Law § 11-1201 et seq. — Maryland General Assembly
• Littler, "Maryland Enacts Law Prohibiting Non-Compete Agreements for Veterinary and Healthcare Professionals" — littler.com
• Ryan LLC v. FTC, No. 3:24-cv-00986 (N.D. Tex. Aug. 20, 2024) — FTC press release

This template is provided for informational purposes only and does not constitute legal advice. Maryland's non-compete framework combines a statutory ban (Md. Code Ann., Lab. & Empl. § 3-716) targeting low-wage workers, veterinarians, and most direct-patient-care healthcare workers, with common-law reasonableness analysis for all other employees. The statutory provisions for healthcare workers took effect July 1, 2025. Customize and review with a Maryland-licensed attorney before use.

Prepared for use on ezel.ai — a legal template platform for solo and small-firm practitioners.