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In Maryland, a non-compete agreement is a type of employment contract that uses restrictive covenants that serves as a legal means that businesses use to ensure that their trade secrets, client lists, and private business methods are kept confidential. A business or company will generally have all new hires and independent contractors sign a non-compete agreement to ensure that they do not engage in competitive behavior once their employment comes to an end.
Once the form is signed, it becomes a legally enforceable document that the employee must abide by. The stipulations included in these documents usually restrict the employee from working for a competitor for a period of time or engaging in competitive behavior such as using a client list or other proprietary client-related information. Such agreements may stand on their own. However, non-compete clauses may also be found in an employment agreement.
Before writing a non-compete agreement, employers should seek legal advice from a law firm that practices employment law. This is important for several reasons. First, employers will gain a better understanding of how Maryland law views non-compete agreements and how Maryland courts treat enforceability and former employees. An attorney can help ensure that the non-compete agreement protects the employer's business interests and customer relationships while also providing adequate consideration as required by the law.
Hiring an independent contractor to work for your Maryland business? Download an independent contractor agreement form now!
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!
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:
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.
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