For much of Maryland, last week was simply the first week in April. In Annapolis, however, the week was about one thing and one thing only – the fate of legislation. Between end-of-session parties and fire trucks on State Circle (a personal gripe), getting from where you were to where you wanted to be could be a challenge. As the legislative session closed sine die (Latin meaning without a day (to resume)), Lobbyists, Legislators, and advocates reflected on where they had started the session and where they had ended up – all wondering whether bills that had dominated their lives since January would be signed or die (I couldn’t resist).
That Legislative Session – between January 10 and April 8 (90 days) is a bit like March Madness with a large number of bills gradually being whittled down to those that make it to Governor Wes Moore’s desk. Next year I might put together a bracket …
But as important as March Madness games are to selected teams – the stakes involved with those introduced bills are exponentially higher. Some bills feature support from high-powered and high-cost lobbying firms or lobbying arms of law firms. Others are impassioned efforts by those who believe that certain changes in the law can radically change the lives of Marylanders. Sometimes there is overlap. Other times there isn’t.
From criminal justice reform to public housing initiatives to changes in the protections for employees (both private and state) – the close of the legislative session can signify that change is on the way (depending on the Governor’s action or non-action).
My goal over the next several weeks and months (before new legislation is scheduled to take effect) is to highlight some of the areas where the 2024 Legislature has altered the landscape for working Marylanders. Today’s spotlight is on a change to the treatment of non-compete agreements in the State.
Maryland Code, Labor & Employment Section 3-413.
Amidst a growing national conversation about the validity of non-compete agreements, House Bill 1388 (“HB1388”) – Noncompete and Conflict of Interest Clauses for Veterinary and Health Care Professionals and Study of the Health Care Market – is currently awaiting Governor Moore’s signature with every expectation that it will be signed and go into effect on June 1, 2024, as scheduled.
Current law impacts certain lower wage positions, and though the changes passed only impact health care providers, and veterinary service providers, for those affected, the effect is important.
Non-competes can have a real impact in areas where careers require state licensure. Broad language, long duration, and wide geographic areas can place those licensed in a difficult position – forced, if they want or need to make a job change, to face the uncertainty of whether non-competes they signed are enforceable and the reality of high legal fees to try to figure it out. The dilemma poses a restraint on trade and reduces the mobility of the workforce.
Current law prohibits non-compete agreements for those who earn less than 150% of the State Minimum Wage ($16.32 – $19.88 per hour depending on employer type and age of employee). HB1388 changes the law to add coverage for those:
- required to maintain State Licensure under the Health Occupations Article;
- and directly provide patient care
- and earn less than $350,000 in total compensation annually; or
- employed as a Veterinary Practitioner or Veterinary Technician under the Agriculture Subtitle.
Once signed, the law will go into effect on June 1, 2024, and prohibit all non-competes for those making 150% of the State Minimum Wage or Less and all whose positions 1) require licensure under the Health Occupations Article, 2) involve direct patient care, and 3) who make $350,000 or less and to all Veterinary Practitioners or Veterinary Technicians.
For healthcare occupations that would otherwise be covered by the extension of the law but earn over $350,000 per year in total compensation, non-competes are limited to a 12-month duration and a geographic area of 10 miles from the former place of work (and the employer must inform patients of the former employee’s new practice location if the patient requests that information).
For those not covered by the change to the law, the message from the Legislature is clear: non-competes are disfavored and employers who are not impacted by recent law changes should nevertheless consider whether there are other ways they can structure employee agreements to protect their interests lest they find themselves in the position of healthcare and veterinary employers today.
Smithey Law Group routinely advises employees and employers about employee agreements and contracts, including the enforceability of restrictive covenants. Please contact us if you need advice about your current agreement or require consultation regarding litigation over non-competes.
