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May 31, 2024
Under Maryland House Bill 1388 (HB 1388), broader restrictions on non-compete agreements are going into effect, starting June 1, 2024, and will present new challenges for Maryland employers of veterinary and health care professionals.
Maryland already bans non-competes for workers earning less than 150% of the state minimum wage (which amounts to roughly $46,800 annually). The new Maryland law, Non-compete and Conflict of Interest Clauses for Veterinary and Health Care Professionals and Study of the Health Care Market, expands on existing legislation, in several important ways:
Veterinary Practitioners and Veterinary Technicians
First, the new law voids all non-competes and conflict of interest provisions in employment contracts with veterinary practitioners and veterinary technicians licensed under Title 2, Subtitle 3 of Maryland’s Agriculture Article. Although this aspect of the new law very clearly takes effect on June 1, 2024, it is unclear whether it applies retroactively or only to employment contracts signed on or after June 1, 2024.
Health Care Professionals Earning $350,000 or LESS
The new law also voids non-competes and conflict of interest provisions in employment contracts executed on or after July 1, 2025 with health care professionals who: (i) are required to be licensed under the Health Occupations Article (physicians, nurse practitioners, nurses, and dentists, among others); (ii) provide direct patient care; and (iii) earn no more than $350,000 in total annual compensation.
Health Care Professionals Earning MORE than $350,000
Although the new law does not prohibit the use of non-compete agreements for health care professionals earning more than $350,000, it does tack on some notable limitations. Specifically, licensed health care professionals who provide direct patient care and whose income exceeds $350,000 may continue to be held to a non-compete, however, a non-compete or conflict of interest provision executed on or after July 1, 2025 may not exceed the maximum allowable time (one year, or less) or geographic scope (10 miles, or less, from the professional’s primary place of employment). In addition, when patients request information about a former health care professional (who was earning more than $350,000 and is covered by the new law), employers are required to provide the new location where the professional will be practicing.
What Should Employers with Veterinary and Health Care Professionals Do Next?
The new law becomes effective for covered veterinary professionals on June 1, 2024, and for covered health care professionals on July 1, 2025. Employers are encouraged to perform audits of their non-compete agreements to see whether they need to be adjusted or narrowed to comply with the new law. Keep in mind that the new law does not limit or prevent the continued use of non-solicit agreements or contracts that prevent workers from taking or using client lists, patient data, or other proprietary, trade secret information. If you have questions about whether your agreements sufficiently protect your company’s interests and remain enforceable under the new law, we can help.
The author of this article, Michelle A. Liebesman, is a member of the Bar of Pennsylvania. This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice in Pennsylvania, Maryland, or any other jurisdiction, nor does it establish an attorney-client relationship with any reader of the article where one does not exist. Always consult an attorney with specific legal issues.
