Can I require employees to sign non-compete agreements in Maryland? What are the requirements?

Non-compete agreements for employees in Maryland

In Maryland, non-compete agreements are generally enforceable if they are reasonable in scope and duration and necessary to protect the employer’s legitimate business interests ^[1.1]. However, there are certain requirements that must be met for a non-compete agreement to be valid.

Requirements for a valid non-compete agreement

1. Consideration: The employee must receive something of value in exchange for signing the non-compete agreement, such as a job offer, a promotion, or access to confidential information ^[1.1].
2. Reasonableness: The non-compete agreement must be reasonable in scope and duration. This means that it must not be overly broad or restrictive and must be limited to protecting the employer’s legitimate business interests ^[1.1].
3. Legitimate business interests: The non-compete agreement must be necessary to protect the employer’s legitimate business interests, such as trade secrets, confidential information, or customer relationships ^[1.1].
4. Notice: The employee must be given reasonable notice of the non-compete agreement before signing it ^[1.1].

Enforceability of non-compete agreements

If a non-compete agreement meets the above requirements, it is generally enforceable in Maryland. However, if the agreement is found to be overly broad or restrictive, a court may modify or refuse to enforce it ^[1.1].

Conversion of an entity to a Maryland corporation

If an entity is being converted to a Maryland corporation, the stock, membership interests, partnership interests, beneficial interests, or other ownership interests of the entity may be exchanged for or converted into stock of the Maryland corporation or stock, evidence of indebtedness, membership interests, partnership interests, beneficial interests, or other ownership interests of any other corporation or other entity, whether or not party to the conversion, other tangible or intangible property, money, or any other consideration ^[1.2]. The conversion of an entity to a Maryland corporation shall be completed on the later of the incorporation of the Maryland corporation in accordance with Title 2 of the Maryland Code or the effectiveness of articles of conversion filed for record with the Department ^[1.3].

Conclusion

In summary, non-compete agreements are generally enforceable in Maryland if they are reasonable in scope and duration and necessary to protect the employer’s legitimate business interests. However, there are certain requirements that must be met for a non-compete agreement to be valid. Employers should consult with legal counsel to ensure that their non-compete agreements comply with Maryland law. If an entity is being converted to a Maryland corporation, the stock, membership interests, partnership interests, beneficial interests, or other ownership interests of the entity may be exchanged for or converted into stock of the Maryland corporation or stock, evidence of indebtedness, membership interests, partnership interests, beneficial interests, or other ownership interests of any other corporation or other entity, whether or not party to the conversion, other tangible or intangible property, money, or any other consideration ^[1.2].

Source(s):

• [1.1] Section 3-902
• [1.2] Section 3-905
• [1.3] Section 3-906

Jurisdiction

Maryland

• Labor