Maryland's Expanding Restrictions on Non-Competes: Healthcare and Veterinary Professionals
By David Sotolongo and Raabia Cheema
On April 25, 2024, Maryland Governor Wes Moore approved “Noncompete and Conflict of Interest Clauses for Veterinary and Health Care Professionals and Study of the Health Care Market” (the “Act”), which expands noncompete restrictions to certain health care and veterinary professionals. As we previously reported, the Federal Trade Commission’s (“FTC”) recently issued a “Final Rule,” in which it generally banned post-employment non-compete agreements with employees and independent contractors, regardless of compensation level. While the FTC’s Final Rule is still facing challenges, the Act follows a trend in many jurisdictions of limiting or completely banning non-compete agreements.
The Act prohibits employer non-compete or conflict of interest provisions that restrict “the ability of an employee to enter into employment with a new employer or become self-employed in the same or similar business or trade” for:
(1) Direct patient care providers licensed under the Maryland Health Occupations Article, such as physicians or nurse practitioners, who earn $350,000 or less in total annual compensation; and
(2) Veterinary practitioners or veterinary technicians licensed under Title 2, Subtitle 3 of Maryland’s Agriculture Article.
For direct patient care providers who earn in excess of $350,000 annually, the Act limits non-compete restrictions to no more than one year from the last day of employment, and restricts the geographic radius of the non-compete to ten miles or less. The Act also requires employers of direct care providers to notify patients of the provider’s new location, if asked.
The Act became effective for veterinary practitioners on June 1, 2024, and it will become effective for direct patient care providers in one year, on July 1, 2025. The restrictions in the Act will apply only to agreements that are executed after the above dates—noncompete provisions in pre-existing agreements will remain enforceable.
Recall that under Maryland law, non-compete clauses are invalid for workers who earn equal to or less than 150% of Maryland minimum wage.
Employers in the healthcare industry with employees in Maryland should review existing and proposed employment agreements and determine adjustments to be made.
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