What seemed like a distant threat is now rapidly approaching. On July 1, 2025, certain non-compete agreements for certain healthcare professionals in Maryland will be null and void. The text of the law is here. Let’s take a look at what this law means (and does not mean), and what employers can do about it.
Who does the law apply to?
- The law applies to any healthcare professional licensed under the Maryland Health Occupations Article who provides “direct patient care.” Practically speaking, that would include all Maryland dentists, physicians, physician assistants, nurses, etc., so long as their position is patient-facing (and not merely research-based).
What kind of provisions are impacted?
- The law broadly prohibits “noncompete or conflict of interest provisions” that “restrict 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.”
- The most important exception is the compensation threshold. For an employee earning more than $350,000 annually, non-competes are permitted; however, even for such employees, the non-compete cannot restrict them for greater than one year post-termination or from working in an area more than 10 miles from their primary place of employment.
What about current contracts?
- The law specifies that it only applies to non-competes “executed on or after July 1, 2025.” So, no – current contracts will not become unenforceable on that date.
- That being said, if an employer does not plan on modifying its current contractual arrangements, they may be in the difficult position of justifying to current (and longer-tenured) employees why the healthcare professionals recently hired by the company are getting a far better deal.
What about other restrictive covenants in employment agreements?
- The law specifically exempts from coverage the “taking or use of a client or patient list or other proprietary client-related or patient-related information.”
- The law also does not in any way prohibit non-solicitation provisions or general confidentiality provisions.
So, what now?
- Speak with an RKW attorney about your business goals concerning your employment agreements. Will you be modifying existing arrangements? If so, how so? If not, is there any additional consideration you can provide your current employees?
- You will also want to make sure any employment agreement templates are modified to not only comply with the new law, but to increase the protections available to you under existing law. It is easy enough to strike through a non-compete, but do your non-solicitation provisions (and enforcement thereof) adequately protect your interests?
July 1 is rapidly approaching. Make sure you are prepared when it gets here.
