New non-compete restrictions take effect on October 1st

On October 1st, a new Maryland law, found here, takes effect that curtails the use of non-compete restrictions for lower paid employees.  As of that date, Maryland will join several other states and prohibit non-compete agreements entered into with employees who earn equal to or less than $15 per hour or $31,200.  Any such agreement shall be void as against Maryland public policy regardless of whether the agreement was entered into in Maryland.  The law is silent as to whether it applies to existing agreements or only those entered into after October 1st.

The new law contains an exception and carves out agreements restricting the taking or use of a client list or other proprietary client-related information. While one can assume that courts will continue to enforce certain non-solicitation agreements, as well as general trade secret and confidentiality provisions, it remains to be seen how broadly courts will interpret the client list and information carve-out.  For example, if an employee had routinely reviewed and utilized client lists and proprietary information (i.e. pricing models, particular needs, etc.), but does not work with those clients, can he or she then go after those clients in his or her new role?

In the end, these issues are most likely secondary to the purpose and application of the law. Too often, employers seek to enforce blanket non-competes against low-level employees as leverage and to hinder competition (or simply out of spite).These employees who fall under this law more often than not do not have any particularized knowledge that they are going to utilize in their new position and pose no real threat to the prior business.