Maryland Hits Non-Competes: Healthcare Pros Take Note

What happened?

On April 25, 2024, Governor Wes Moore signed HB 1388, which makes “null and void” non-compete and conflict of interest clauses in contracts for certain veterinary practitioners and technicians starting June 1, 2024. From July 1, 2025, similar provisions for healthcare professionals providing direct patient care will also be banned or restricted.

What are the details?

General Bites:

• Existing Maryland law already prohibits non-compete clauses for workers earning less than 150% of the minimum wage. The new law imposes additional limitations on non-compete and conflict-of-interest terms in contracts for certain licensed health care and veterinary professionals.

• The new law renders employment contracts that restrict an employee’s pursuit of future employment or self-employment in a similar field unenforceable.

• The ban does not apply to employment contracts or agreements concerning taking or using a client list or other proprietary client-related information.

Specific Bites for Employers:

• All non-compete and conflict of interest provisions in employment contracts for certain veterinary practitioners and veterinary technicians beginning June 1, 2024, are voided.

• Effective July 1, 2025, non-compete and
  conflict of interest provisions for healthcare professionals licensed under the
  Health Occupations Article who provide “direct patient care” will be banned or
  restricted.
  
  • It is banned in all agreements or provisions executed on or after that date if
    (1) they provide direct patient care and
    (2) earn total annual compensations of $350,000 or less.
  • Are materially restricted and only enforceable if
    (1) the employee is a professional earning more than $350,000,
    (2) they have a restricted period of 1 year or less, and
    (3) the geographic limitation is no greater than 10 miles from the professional’s primary place of employment.
    
• No notice requirement was added, but upon patient request, the law requires employers to inform patients of the new location where a former employee will be practicing.

Business Considerations

• Employers will need to review and possibly revise their employment contracts to comply. If found not to be complying, employers should update their policies, practices, and contracts accordingly.
• Employers need to be mindful of the new law during the onboarding process.
• Employers should consider that, according to Jackson Lewis law firm, “Confidentiality and trade secret agreements can still be used to protect business interests.”
• Employers should stay updated on any further amendments to employment law in Maryland to ensure ongoing compliance.

Source References

• House Bill (HB) 1388

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