If you`re a Maryland-based business owner or employee, it`s essential to understand the ins and outs of non-compete agreements. Maryland is one of the states in the US that has strict laws governing non-compete agreements. In this article, we`ll take a closer look at non-compete agreements in Maryland and what you need to know to stay compliant.
What is a non-compete agreement?
A non-compete agreement is a legally binding contract that prohibits an employee from working for a competitor or starting a competing business for a specified period, usually after leaving their current employer. The purpose of a non-compete agreement is to protect the employer`s trade secrets and confidential information, prevent unfair competition, and retain key employees.
In Maryland, non-compete agreements are only enforceable if they meet specific criteria. The agreement must be:
1. Supported by Consideration: There must be something of value exchanged between the employer and employee for the agreement to be valid.
2. Reasonable in Scope: The agreement must have reasonable geographic and temporal limitations. In Maryland, the agreement must be limited to the geographic areas where the employer conducts business.
3. Necessary to Protect Legitimate Business Interests: The non-compete agreement must be the minimum necessary to protect the employer`s trade secrets or other legitimate business interests.
Are non-compete agreements enforceable in Maryland?
Maryland law allows non-compete agreements, but they are highly scrutinized. Courts in Maryland are generally skeptical of non-compete agreements and will only enforce them if they meet the criteria outlined above. If the agreement is too broad or unreasonable, a court may refuse to enforce it.
What happens if you violate a non-compete agreement in Maryland?
If an employee violates a non-compete agreement in Maryland, the employer can seek an injunction to prevent the employee from continuing to work for the competitor or starting a competing business. The employer may also seek damages if they can prove that the violation caused them financial harm. It`s essential to note that the employer must show that the harm resulted directly from the employee`s violation of the agreement.
Non-compete agreements are a valuable tool for employers to protect their trade secrets and retain key employees. Still, they must comply with Maryland law to be enforceable. If you`re a business owner or employee in Maryland, it`s crucial to consult with a legal professional to understand if a non-compete agreement is enforceable and what steps you need to take to stay compliant. Remember, non-compete agreements are highly scrutinized in Maryland, and violating one can be costly.