New Noncompete Law in Maryland
- September 30, 2025
- Business Law
The Maryland General Assembly recently passed legislation creating a new law that restricts noncompetes in the healthcare industry, as well as among veterinary professionals. The law also limits conflict-of-interest provisions in employment contracts for certain healthcare and veterinary professionals. House Bill 1388 lays out the terms and conditions of the limits and ban.
From June 1, 2024, noncompete and conflict-of-interest provisions are banned for employees licensed as veterinary practitioners and veterinary technicians. As of July 1, 2025, these provisions will be materially limited or banned among healthcare professionals providing direct patient care. The law also mandates that employers inform patients when a healthcare professional impacted by these restrictions moves to a new practice location. The legislation in Maryland is part of a nationwide trend to restrict noncompetes and enhance greater employee mobility across the U.S. The law ushers in a new era of employment law in Maryland.
Definition of Noncompete Provisions
A noncompete clause, also known as a noncompete agreement (NCA), is a contractual agreement that stops an employee from starting a similar business or working for a competitor for a specific period of time after leaving their current job. Noncompete clauses are often designed to protect a company’s valuable or proprietary information, such as marketing plans, trade secrets, and customer lists. But some argue that noncompetes can also be harmful to employees, making it hard for them to find new work, especially if they are specific to one industry.
Provisions in the Maryland Law
Maryland HB 1388 amends the Annotated Code of Maryland’s Labor and Employment Section 3-716(a). It expands the provisions of current law stating that a conflict-of-interest or noncompete provision is null and void when applied to an employment contract for a worker who is required to be licensed under the Health Occupations Article or as a veterinary practitioner or veterinary technician.
The law further states that employment clauses that impede a worker’s ability to seek alternative employment or venture into self-employment cannot be enforced. The implications of the law for veterinary and healthcare-related employers are significant. Noncompete and conflict-of-interest elements are now banned for employees licensed as veterinary practitioners or veterinary technicians under Title 2, Subtitle 3 of the Agriculture Article.
In addition, conflict-of-interest and noncompete provisions for employees licensed under the Health Occupations Article – such as doctors, nurses, nurse practitioners, dentists, midwives, optometrists, psychologists, and pharmacists – who administer “direct patient care” are either (1) banned for professionals earning $350,000 annually or less or (2) materially limited for professionals earning more than $350,000 each year. With respect to those who fall into the second group, noncompete provisions are unenforceable only if they have (a) a restricted period of more than one year or (b) geographic limitation greater than 10 miles from their primary place of employment.
In Other News: FTC’s New Rule Banning Noncompetes Is Stayed
The Federal Trade Commission (FTC) issued a new rule for noncompete contract clauses and documents, which may or may not go into effect because of legal challenges. Nonetheless, it’s important for business owners to familiarize themselves with the FTC’s new rule so that they are prepared for whatever comes next.
The FTC issued a final rule in 2024 banning noncompetes nationwide, citing the desire to promote competition, protect the right of workers to change jobs, foster new business formation, and increase innovation. In August 2024, a district court issued an order stopping the FTC from enforcing the rule. The FTC appealed the ruling but in March 2025, the appeal was stayed for 120 days. Despite the legal wrangling, the FTC may still address noncompetes on a case-by-case basis.
The FTC has argued that noncompetes have a chilling effect on the creation of new businesses, saying that roughly 8,500 new start-ups would be created each year if businesses did not have the ability to create and enforce noncompetes. According to the FTC, banning noncompetes will lead to 2.7% growth in new business formation each year. The final rule is expected to boost the average worker’s earnings by $524 a year and is expected to decrease healthcare costs by as much as $194 billion over the coming decade. The FTC also asserts that the number of new patents generated each year will increase by 17,000 to 29,000 over the next 10 years with the banning of noncompetes.
Noncompetes are widely used by businesses in the U.S. and in Maryland. An estimated 30 million workers – or 1 in 5 Americans – are currently subject to noncompetes as part of their employment. These impose contractual limitations on an employee’s ability to change jobs, launch a new business, work for a new employer in the same geographic area, or other restrictions. Fighting noncompetes in court can be very expensive and time consuming.
FTC Says Majority of Noncompetes Are No Longer Enforceable
Under the new FTC rule, if it goes into effect, existing noncompetes for the vast majority of workers will no longer be enforceable. Existing noncompetes for senior executives and C-suite leaders (estimated at less than 0.75% of all workers) can remain in force under the new rule, but businesses cannot create or impose any new noncompetes going forward. The FTC defines senior executives as employees who earn more than $151,164 annually and who are in policy-making positions.
Employers will be required to give notice to all affected workers that their current noncompetes will no longer be enforceable. The FTC provides model language businesses can use to communicate this to workers. Given the new rule and the district court’s halt of it, there is bound to be uncertainty and confusion among both business owners and employees about what this all means.
Business owners will want to watch the FTC and appeals court, as well as any additional lawsuits that are filed, to see where the fight over the future of noncompetes is headed. For now, business owners with employees who are currently subject to noncompetes as part of the terms of their employment may want to consult a skilled and experienced business attorney to ask questions and understand more fully the implications of the FTC’s rule on their particular business and compliance obligations.
Useful Alternatives to Noncompetes
Those opposed to noncompetes say that business owners do not need to rely on noncompetes because there are other legal tools at their disposal to protect trade secrets, investments, and clients. Nondisclosure agreements (NDAs) and trade secret laws provide employers with the means to protect sensitive and proprietary information, the FTC argues. Research shows that roughly 95% of employees with noncompetes also have NDAs.
Contact Lusk Law, LLC for Legal Guidance on Business Issues
Lusk Law, LLC is a firm that prioritizes and focuses on business law. Our attorneys are highly experienced business lawyers, and some of our attorneys are also small-business owners, landlords, and real estate investors. We spend countless hours advising business owners, listening to their questions, and providing meaningful answers when dealing with emerging rules and laws that affect employment. We utilize our experience to aggressively litigate on behalf of business owners across Maryland. Lusk Law, LLC also offers a range of other legal services, including landlord and tenant law, real estate law, and animal law. To discuss a labor and employment matter in Maryland, contact Lusk Law, LLC at (443) 535-9715.