Make a Maryland Non-Compete Agreement

Applicable State Laws - Md. Code, Lab. & Empl. § 3-716 

Maryland's Annotated Code states that non-compete agreements may only be used to protect legitimate business interests, which generally include trade secrets, routes, client lists, established customer relationships, goodwill, and unique services. Non-compete agreements may not cause undue hardship to the employee or be contrary to public policy. Additionally, as of October 1, 2020, low-wage employees, who make less than $15 per hour or less than $31,200 per year, may not sign a non-compete agreement.

Protect your Maryland business by also using a Maryland non-disclosure agreement form. Download a Maryland non-disclosure agreement form now!

How to Write a Maryland Non-Compete Agreement

To write a Maryland non-compete agreement, first review Maryland Annotated Code and the new law that will take effect on October 1, 2020. Include the following clauses:

• Purpose. This clause explains the purpose of the non-compete: to protect legitimate business interests. It also identifies the parties and their roles and includes the effective date of the contract. It may also state that the term "confidential information" will be referred to as "proprietary information" throughout the agreement.
• Non-compete. This clause explains the restrictions on the period of time, geographic scope, general and specific business practices, customers and clients, general and specific competitors, general and specific activities, and employee solicitation.
• Time period. This clause may reaffirm the length of the time period. Then, it states when the time period begins: either when the employment relationship begins or when it is terminated.
• Purchase option. This clause states whether your business allows the signing party to pay a specific amount to buy their way out of the contract. If this is allowed, the amount of the payment is listed in this clause.
• Jurisdiction. This clause sets Maryland Annotated Code as the laws that will govern the agreement.
• Confidential information. This clause states that the term "confidential information" as used throughout the agreement refers to any and all technical and non-technical information provided by your business that includes, and isn't limited to, any data or other proprietary information related to products, inventions, plans, methods, processes, developmental products, experimental products, intellectual property, software, databases, customer lists, vendor lists, supplier lists, marketing methods, reports, business plans, financial information, or other information pertaining to your business or your clients, customers, or licensees that is disclosed to the signing party under the terms of the agreement.
• Permitted disclosure. This clause explains when confidential information is no longer considered confidential. This generally occurs when information becomes public through no fault of the signing party, when information is discovered by the signing party on their own with no breach of another party, and when your business gives written consent for the release of certain information.
• Confidentiality. This clause states that the signing party acknowledges that the information they may access is confidential and they agree they will directly or indirectly communicate it to another party without first gaining written consent from your business. It also states they will not use the information for any purpose except to further your business unless they first gain written consent from your business.
• Consultants and employees bound. This clause states that both consultants and employees are bound to keep confidential information in the strictest of confidence. It also states that they are on a need-to-know basis.
• Return of materials. This clause explains that once the non-compete is terminated or when the business requests it, the signing party must return all documents and other tangible material that represents the confidential information of the business as well as any copies that exist. It also states that your business will notify the signing party upon discovering any loss or unauthorized disclosure of the confidential information.
• Remedies. This clause explains the remedies that your business is entitled to pursue under Maryland Annotated Code in the event that the signing party does not uphold their obligations as stated in the agreement. Examples include the recovery of court costs, the recovery of reasonable attorney fees, the award by a Maryland court of a temporary restraining order or preliminary injunction against the unauthorized use, etc., as well as all other remedies available under Maryland law or through equity.
• Choice of law. This clause states that the parties in the non-compete choose to have Maryland Annotated Code govern the agreement.
• Entire agreement. This final clause states that the entire agreement may be amended if the parties amend it in writing and if both parties sign the amendment.

The parties must sign and print their names. The signatures must be dated. The parties should receive a copy of the executed agreement for their records.