Warning: Recent Court Decisions Invalidate Standard Non-Compete Language in Maryland

Would your Non-Compete and Non-Solicitation Agreements Hold Up?

Recent court decisions have eviscerated some non-compete and non-solicitation provisions that Maryland employers have used for years.  Generally speaking, non-compete and non-solicitation restrictions will be upheld if they are “narrowly tailored to protect a legitimate business interest” – but not if they are found to be “overly broad.”  Recently, our courts have held that the following language is generally overly broad and, therefore, unenforceable:

  • “Employee may not directly or indirectly attempt to engage in the same or similar business as Company in any market in which Company does business;”
  • “Employee may not solicit business from any one of Company’s customers.”

Employees have always had an argument that this type of language is overly-broad; however, Maryland courts have never been so explicit in condemning this language as unenforceable.  As with all non-compete cases, the devil is in the details.  If your company uses non-compete or non-solicitation agreements, please review the language in those documents.  If it is similar to the language above have your attorney provide an opinion as to whether your agreements are likely to be enforceable in light of this new case law.

Problematic non-compete and non-solicitation agreements should be revised by counsel and re-signed by your company’s employees ASAP. Better to go through that hassle now than to check your agreement after top producer leaves — only to find that the court will no longer uphold the non-compete and non-solicitation provisions upon which your company relied.