Non-compete Clause
(MD)

Summary

This is an employee non-compete clause (also known as a non-competition clause or covenant not to compete) intended for use in an agreement that is subject to Maryland law. This template includes practical guidance, drafting notes, and alternate clauses. IMPORTANT NOTE: On April 23, 2024, the FTC issued its final rule prohibiting new non-compete agreements with all workers. The rule provides that existing non-compete agreements with senior executives remain in force, and existing non-competes with all other workers are not enforceable. The term “senior executive” means a worker who makes more than $151,164 and who is in a “policy-making position.” The final rule is set to become effective 120 days after publication in the Federal Register, but it is being challenged in court, including by the U.S. Chamber of Commerce. For more information on the FTC’s final rule, see Fact Sheet on the FTC’s Noncompete Rule. A traditional non-compete prohibits competing activities by an employee, typically for a specified period and often within a designated geographical area. Such covenants raise restraint-of-trade and other public policy concerns, and many states restrict their use by statute or common law. In Maryland, non-compete enforceability is generally a matter of common law, except for a statute prohibiting enforcement of non-competes against low-wage workers (Md. Code Ann., Lab. & Empl. § 3-716) and rules relating to attorney non-competes (Md. Lawyer's R. Prof'l Conduct 5.6). See the drafting notes for additional state law guidance and other matters. For a full listing of key content covering restrictive covenant considerations, see Restrictive Covenants Resource Kit. For additional boilerplate terms to consider when incorporating a non-compete into an agreement, see Non-compete, Customer and Employee Non-solicitation, and Confidentiality Agreement (MD). For additional information on Maryland laws concerning non-compete agreements, see Restrictive Covenants (MD). For information on non-compete agreements in Maryland and other states, see Non-competes and Trade Secret Protection State Practice Notes Chart and Non-competes and Trade Secret Protection State Expert Forms Chart. For information on non-competition agreements generally, see Non-compete Agreements: Key Negotiation, Drafting, and Legal Issues; Non-compete Agreements Checklist (Best Drafting Practices for Employers); Restrictive Covenant Basics, Including Adequate Consideration, Protectable Interests, Geographic and Time Restrictions, and Permissible Scope; Restrictive Covenants: Drafting Common Provisions; and Non-compete and Non-solicitation Agreements Checklist (Addressing Suspected Violations).