Maryland, like many other states, recognizes that employers must protect certain information in order to remain in business, which is why they recognize and enforce non-compete agreements with employees. Non-competes require that an employee cannot work in a specific industry within a certain geographic region for a set period of time. At HKM Employment Attorneys, LLP our experienced employment law attorneys have the experience you need to manage any legal issue pertaining to a non-compete agreement with a former employer. If you would like to learn more about your legal options when it comes to a non-compete agreement, call or contact our Baltimore office today.
Why Do Employers Use Non-Compete Agreements?
Employers utilize non-compete agreements in Maryland and elsewhere in order to protect their business interests. Typically, this is to protect certain intellectual property or trade secrets that are used to derive profits for the employer. Non-compete agreements can also be used to protect client or customer lists in order to ensure that an employee will not take that information and start a competing business. In order to protect company interests, a non-compete clause will bar an employee from working in the same industry within a specific geographic region for a certain period of time delineated in the agreement.
What Makes a Non-Compete Enforceable?
If a non-compete agreement is challenged in court, a judge will look at a number of factors to help determine whether the agreement is valid and enforceable. Generally speaking, a court will examine the terms of a non-compete through the lens of fairness, both to the employee and the employer. Some of the most common considerations include the following:
- Whether the agreement goes against the public interest
- Whether the non-compete unduly restrains the employee
- Whether the agreement goes above and beyond what is necessary to protect the employer
- The uniqueness of the employee’s skills or information
- The nature and extent of a former employee’s contact with the employer’s current customers
- Whether the non-compete is necessary to prevent the misappropriation of the employer’s confidential information
- Whether there was consideration to the employee in exchange for the non-compete agreement
Consideration is particularly important for non-compete agreements. This means that an employer must provide something of value to the employee in exchange for their agreement to a non-compete. In exchange for an employee giving up their right to work wherever they want, an employer must provide something of significant value in return. In some cases, consideration can be the promise of substantial future employment, such as a job offer. However, if a non-compete is presented to a current employee consideration can take the form of promised continued employment or for monetary compensation if negotiated as part of a severance package.
If the court finds that the non-compete agreement went beyond the typical scope of this type of protection or consideration was not given in exchange for the non-compete, a judge may throw it out or redefine the terms in the employee’s favor. An experienced employment law attorney can help determine whether or not a non-compete agreement is valid in your case.
Limitations on Non-Compete Agreements
There are limitations to the terms of a non-compete agreement. An employer cannot simply ban an employee from ever working in the same industry in the same geographic area ever again. Maryland also recently introduced additional restrictions on non-compete agreements in the state’s Non-compete and Conflict of Interest Clause Act (NCICA). Under this new law, a non-compete clause is not enforceable for employees who earn less than or equal to $31,200 annually or $15.00 per hour, effective October 1, 2019. This law comes after a blog post from the White House in 2016 that estimated about 15% of all employees subject to non-compete clauses did not have a college degree and 14% were earning less than $40,000 per year.
Geographic limitations in a non-compete agreement typically extend to the employer’s business territory. Typically, this includes a few counties or states, depending on the size of the employer and the nature of their business. However, larger companies may try and claim the entire country as their business territory if they do business in every state. An employment attorney can help limit the scope of the geographic restrictions in a non-compete negotiation.
An employer is also limited in the time restrictions on a non-compete clause. Maryland has no set limit on the time restrictions for a non-compete agreement, but they typically last anywhere from a few months to a few years. One way that the courts determine the appropriateness of a non-compete time limit is to see how long it will take the employer to recover their business after the employee leaves. The less specialized the skills or information, the less amount of time is reasonable in a non-compete agreement.
How an Attorney Can Help
Hiring an experienced employment law attorney can make all the difference when negotiating, reviewing, and signing a non-compete agreement. A lawyer can review the terms of the agreement and determine whether the non-compete is reasonable for their client. They can negotiate terms with the employer, including the amount of consideration, geographic limits, and time restrictions in the contract.
After a non-compete agreement is signed, a knowledgeable employment lawyer is critical if an employer claims that a former employee breached the terms of their agreement or if the employee believes that the terms were unreasonable in how their employment was restricted. An attorney can challenge a non-compete agreement in court and make the best possible arguments on behalf of their client. To learn more about how an attorney can help with non-compete clauses in Baltimore, talk to our office now.
Talk to HKM Employment Attorneys Now
Non-compete agreements should never be taken lightly as they can substantially impact an employee’s ability to work for a significant period of time. If you have questions about a non-compete agreement in the Baltimore area the knowledgeable lawyers at HKM Employment Attorneys, LLP are here to help. Call the office or contact us today to schedule a consultation of your case.
