Several months ago, a bill was introduced in the Maryland legislature that would greatly restrict the enforcement of non-compete agreements. While that bill has yet to be passed into law, several other states have now introduced similar legislation, which suggests that the idea of outlawing non-compete agreements is becoming more and more popular in various parts of the country.
Non-compete agreements, or covenants not to compete, are generally a type of employment contract that limits the ability of employees to leave their current employers. Non-competes typically prevent an employee from leaving his or her employer to work for a competitor, and they also restrict former employees from soliciting an old employer’s customers. Many covenants not to compete are not legally enforceable in Maryland, because they are not reasonable or contain legal flaws.
Some non-competes are enforceable, however, and lawmakers in many states including Maryland believe this is having a negative effect on the economy. They argue that laid off workers are not able to find new jobs because of non-compete agreements, and as such they must collect unemployment benefits.
The future of legislation like this remains to be seen. For now, anyone who is asked to sign a covenant not to compete in Maryland may be wise to seek legal advice to ensure the terms are reasonable and that they understand what they are getting into. Those who have already signed a non-compete agreement and are looking to void that agreement may also benefit from legal counsel to learn about their rights and options.
Source: NorthJersey.com, “NJ assembly bill could change enforcement of non-compete agreements for employers, employees,” Mary Diduch, April 22, 2013