Noncompete provisions for most health care professionals are banned or restricted in Maryland as of July 1. Last year, the Maryland General Assembly passed House Bill 1388, significantly impacting the enforceability of noncompete provisions for health care professionals. A noncompete provision is a post-employment restrictive covenant that prohibits an employee from obtaining subsequent employment, including self-employment, in the same or similar business or trade as their former employer. Noncompete provisions are often limited in geographic scope and time. Under the new law, employment agreements that impede such activity will be unenforceable in Maryland no matter how limited.
Maryland courts have historically upheld enforceable noncompete covenants as they pertain to health care professionals. However, state law now will prohibit noncompete provisions for certain health care professionals. First, the prohibition only applies to individuals who are required to be licensed under the Maryland Health Occupations Article (licensed physicians, nurses, physical therapists, social workers, etc.). Second, to be subjected to a noncompete, the licensed individual must provide “direct patient care,” which the law does not define. Third, the licensed individual must not earn more than $350,000 annually. If the individual meets all three of these criteria, any noncompete provision restricting their pursuit of future employment in any way will be void and unenforceable.
For health care workers who earn more than $350,000, noncompete clauses remain permissible but, to be enforceable, they must be narrowly tailored so that the restrictive period does not exceed 1 year, and the geographic limitation does not exceed 10 miles from the person’s primary place of employment. Further, at the request of a patient, employers will now be required to share the new practice location of any departing employee earning more than $350,000.
Significantly, this new law is not retroactive and will only apply to noncompete agreements entered after July 1, 2025. The ban also does not apply to other restrictive covenants, including taking or using a client list or other proprietary client information such as nondisclosure and confidentiality provisions.
Employers should review their employment agreements for compliance and remain mindful of the applicable laws when recruiting and hiring. The Miles & Stockbridge health care and employment law teams will continue to monitor developments as this law is implemented and are available to answer any questions that employers might have about this legislation.
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