Maryland Bans Non-Compete Agreements for Health Care Professionals Earning $350,000 or Less Per Year
Maryland has banned non-compete agreements for licensed health care professionals caring for patients who make $350,000 annually or less, through a phased-in approach, with the ban going into effect on July 1, 2025. The ban for veterinarian professionals has no income restrictions and goes into effect with the entire law on June 1, 2024. See Md. Code, Lab. & Empl. § 3-717 (2024).
I. Licensed Healthcare and Veterinary Professionals in Maryland Benefit From a Non-Compete Ban.
The licensed health care professionals who benefit from this ban must provide "direct patient care," § 3-717(a)(1)(i)(2)(B). So, a nurse analyst who does medical billing work in an office is likely not covered by this ban.
Furthermore the law also bans non-compete agreements entirely for licensed veterinarians and veterinarian technicians.
Based on the text of the original House Bill, HB1388, the veterinary industry ban will become effective on June 1, 2024, because the delay provision does not cite to the section where this ban shall be located, at § 3-717(a)(1)(i)(3), in available drafts or the Bill itself. There is no income limit here for licensed vets and vet techs.
For health care professionals such as doctors making above $350,000 annually, the new law will limit any non-compete provisions in their contracts to one year or less in duration starting in July 2025.
Further for these high income licensed healthcare professionals working directly with patients, any non-compete can only cover "10 miles from the primary place of employment." A lawful non-compete cannot be measured, for instance, from any location within a hospital or HMO network and so become statewide. Id. § 3-717 (b).
II. Further Discussion:
Maryland's ban on non-competes for licensed health care professionals making $350,000 annually or less, and licensed veterinary professionals entirely, is part of an increasing trend in Maryland and nationally disfavoring non-compete agreements.
A non-compete prevents someone from working in the same competitive industry after employment, whether limited to nearby, statewide, nationally, etc., and often for six months to one year or more, depending on the contractual language.
A non-compete is not the same as a confidentiality agreement. It's also not a non-solicitation clause. A non-solicitation clause in an employment contract often bans an employee from soliciting fellow employees to leave for a new employer. It also often bans soliciting a company's clients to leave with the same employee to a new service provider company. Non-solicitation clauses often are limited to six months, one year, or more, post employment.
III. FTC Activity:
In terms of increasing restrictions on non-compete provisions in employment contracts, the U.S. Federal Trade Commission (FTC) recently enacted a rule, the "Noncompete Rule" for short, banning all non-compete contractual provisions for any employee involved in interstate commerce who is not a "senior executive" making in excess of "$151,164" annually.
The FTC jurisdiction is broad, but according to the FTC does not cover banking, the savings-and-loan industry, or certain non-profits. The FTC has provided a handy PORTAL (LINKED HERE), with Rule text, information, and handouts for employees and businesses alike. It goes into effect on Sept. 4, 2024.
The FTC Rule also is subject to several federal lawsuits. So what happens remains to be seen. The FTC Noncompete Rule is beyond the scope of our Maryland discussion, but let's keep an eye on it.
IV. Conclusion:
In sum, Maryland has banned non-compete agreements for licensed health care professionals caring for patients who make $350,000 annually or less, through a phased-in approach, effective in July 2025 onward, and concerning licensed veterinarian professionals starting in June 2024. Md. Code, Lab. & Empl. § 3-717 (2024).
Gregg H. Mosson, Esq.
Mosson Law, LLC
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