Non-Compete Agreements in Maryland: What the 2019 Law Changed and What It Means If You Were Fired
When Maryland employees are fired and handed a non-compete agreement to sign, or when they are threatened with enforcement of one they signed years earlier, the assumption in most of these conversations is that the agreement is valid and must be respected. That assumption is often wrong. Maryland changed its non-compete law in 2019 in ways that voided these agreements for a significant category of workers, and the law has continued to evolve since. Wrongful termination lawyers in Maryland who work with employees navigating post-termination restrictions know that many of the agreements being enforced, or being used to intimidate employees from seeking new work, are either partially or entirely unenforceable under current Maryland law.
The consequences of not understanding this landscape are real. A Maryland employee who accepts a restrictive non-compete as valid when it is not may limit their employment options unnecessarily for months or years. An employee who was fired partly because they questioned an agreement’s scope or refused to sign a new one may have a retaliation claim they never pursued. And an employee who signed a severance package releasing claims without knowing the non-compete in it was unenforceable may have given up legal rights in exchange for contractual restrictions that were not worth accepting.
What Maryland’s 2019 Non-Compete Law Actually Changed
Prior to 2019, Maryland courts applied a common law reasonableness standard to non-compete agreements. If the geographic scope, duration, and scope of restricted activities were reasonable given the employer’s legitimate business interests, the agreement was enforceable regardless of the employee’s compensation level or position.
In 2019, Maryland enacted legislation that changed this significantly for lower-wage workers. Under the new law, non-compete and conflict of interest clauses in employment agreements are void and unenforceable if the employee earns equal to or less than $15 per hour or $31,200 per year. The legislation applies to agreements entered into, renewed, or extended after the law’s effective date of October 1, 2019. An employer who attempts to enforce a non-compete against an employee who fell below that threshold when the agreement was entered into, renewed, or extended cannot do so under Maryland law.
Maryland subsequently raised this threshold. As of October 2023, the salary floor was increased to $31,200 annually or $15 per hour for agreements entered into, renewed, or extended on or after that date. Employees who entered into or renewed agreements after that date at compensation below the new threshold have agreements that are void under the statute.
The statute also limits the geographic scope of enforceable non-competes. Even for employees who do earn above the threshold, an agreement that attempts to prohibit competition across geographic areas where the employer does not actually operate, or that extends for unreasonably long durations, remains subject to the common law reasonableness challenge. The 2019 law did not eliminate judicial scrutiny of non-competes for higher-earning employees. It added a floor of statutory protection below which they are void regardless of reasonableness.
The Healthcare Sector Exception and What It Means for Maryland Medical Professionals
Maryland has also enacted specific restrictions on non-compete agreements in the healthcare sector. Under legislation that took effect in 2020 and has been subsequently amended, non-compete agreements for certain healthcare practitioners, including physicians, are void and unenforceable to the extent they prevent the practitioner from practicing in an area where there is a demonstrated need for their services, where enforcement would significantly affect patient access to care, or where the practitioner’s patient population would experience a disruption in care.
For Maryland physicians, nurse practitioners, and other covered healthcare professionals who were terminated and then faced with non-compete enforcement that would cut them off from their patients or from underserved communities, the healthcare-specific statute provides a direct defense. Courts are required to consider patient access to care as a factor in evaluating whether enforcement is appropriate, and in some cases the statute effectively requires that the non-compete yield to this public interest consideration.
Healthcare employment agreements in Maryland deserve careful review by an employment attorney before a terminated practitioner assumes they are bound by the terms as written. Many agreements contain geographic and duration restrictions that exceed what Maryland courts will enforce, and many practitioners have signed agreements that are fully unenforceable under the current statute without knowing it.
When a Non-Compete Intersects With a Wrongful Termination Claim
The non-compete and wrongful termination issues become directly connected in several common scenarios. Each creates a distinct legal argument that an employment attorney evaluates at the outset of the case.
The first scenario is termination in retaliation for questioning a non-compete. An employee who raises concerns about a non-compete’s scope, refuses to sign a new or expanded agreement, or consults an attorney about an agreement’s enforceability has not engaged in illegal conduct. If an employer fires that employee shortly after these events, the timing creates a potential retaliation claim, particularly if the termination is framed as a performance issue that appeared only after the non-compete question was raised.
The second scenario involves termination combined with aggressive non-compete enforcement designed to prevent the employee from finding new work. When a Maryland employer fires an employee and then sends cease-and-desist letters to prospective new employers, threatens injunctive action, or places conditions on a severance agreement that are tied to the non-compete, these actions may amount to tortious interference with prospective employment. If the underlying non-compete is unenforceable under Maryland law, the employer’s attempt to enforce it can itself give rise to a legal claim.
The third scenario is a severance agreement that includes both a release of claims and a non-compete clause. Many Maryland employees sign these agreements without understanding that the non-compete they are accepting may already be void under state law. Signing a severance agreement with an unenforceable non-compete does not automatically make the restriction enforceable, but it can create uncertainty that prevents the employee from pursuing new employment freely. Having an attorney review the agreement before signing is the most efficient way to clarify what is and is not binding.
How Maryland Courts Analyze Non-Compete Enforceability Beyond the Statutory Threshold
For employees earning above the statutory salary floor, Maryland courts apply a common law balancing test to determine whether a non-compete is enforceable. The agreement must be limited in scope and duration to what is reasonably necessary to protect the employer’s legitimate business interests. It must not impose undue hardship on the employee. And it must not harm the public interest.
In practice, Maryland courts have been skeptical of non-competes that extend beyond one to two years, that cover geographic areas where the employer does not meaningfully operate, or that prohibit all competitive employment in an industry rather than being limited to the specific role the employee performed. A non-compete signed by a customer service representative that purports to prohibit any employment in the industry for three years across a multi-state area is the type of agreement that faces significant enforceability challenges regardless of whether the employee’s compensation exceeds the statutory floor.
Maryland courts have also taken different approaches to the question of whether to reform, or “blue pencil,” an overbroad non-compete to make it enforceable, versus voiding it entirely. Some courts will narrow an agreement to its enforceable scope. Others will refuse to enforce it at all if the overreach is significant enough. An employee facing a non-compete enforcement action needs legal counsel who understands how Maryland courts in the relevant jurisdiction have approached this question.
Contact Wrongful Termination Lawyers in Maryland to Evaluate Your Non-Compete Situation
A non-compete agreement that looks binding on its face may be partially or entirely void under Maryland’s current statutory framework or unenforceable under the common law reasonableness standard. An employer threatening enforcement of such an agreement, or firing an employee who questioned its scope, may be creating legal exposure rather than exercising legitimate contractual rights. Getting a legal assessment before accepting restrictions on your employment options is one of the most practical things a terminated Maryland employee can do.
The Mundaca Law Firm’s wrongful termination lawyers in Maryland evaluate non-compete enforceability alongside wrongful termination and retaliation claims, ensuring that clients understand both their obligations and their rights under current Maryland law. If you were fired in circumstances involving a non-compete, or if you are facing threatened enforcement of an agreement you are not sure is valid, contact The Mundaca Law Firm to schedule a consultation before limiting your employment options based on an agreement that may not bind you.
