A new state law in Maryland now prohibits employers from requiring low-wage employees to enter into noncompete agreements. Maryland Senate Bill 328, which took effect on October 1, 2019, prohibits employers from obligating any employee who earns less than $15.00 per hour or $31,200 per year from entering into an agreement that restricts the employee’s ability to work with a new employer in the same or similar business. The statute provides that entry into such agreements with low-wage employees is against public policy and therefore void.
While the new statute prohibits the use of noncompete agreements with low-wage employees, it explicitly does not apply to agreements that prevent employees from taking or using client lists or other proprietary client-related information, regardless of how much they earn. So Maryland employers may still consider using customer nonsolicitation agreements, as well as agreements that specifically protect an employer’s confidential and proprietary information.
With the enactment of this new statute, Maryland joins a growing list of states, such as Rhode Island, Oregon and Massachusetts, that place restrictions on noncompete agreements based on employee earnings. Maryland employers may want to consider taking a second look at their noncompete agreements and adjust their usage accordingly.
