Newly proposed legislation in the Maryland Assembly would declare noncompete and conflict of interest clauses null and void for employees during certain business transitions.
The legislation, now SB 900 in the Senate, would apply to businesses that relocate their principal place of business outside of Maryland, reorganize in a way that fundamentally alters their Maryland footprint, or cease the majority of their operations within the state.
Maryland has already implemented several layers of noncompete protections over the last few years, creating a tiered system where low-to-mid wage earners and many health care professionals are already shielded from such restrictions.
This new proposal specifically targets employees of businesses with more than thirty employees, the majority of whom are located in Maryland. If that business leaves the state or shuts down most of its local operations, the noncompete effectively evaporates for its workforce.
The legislative intent appears to be the protection of stranded workers who find themselves without a local employer but still legally barred from finding new work in their home state. When a company chooses to move its operations out of Maryland or undergoes a massive reorganization, the employer’s legitimate business interest in protecting its local market share is significantly diminished.
While the bill is still in the hearing, its introduction signals a clear appetite in Annapolis for further restricting post-employment restraints. If passed, the act is currently slated to take effect on October 1, 2026, and would likely apply to employment agreements executed on or after that date.
Contact the employment attorneys at Potomac Legal Group for more information. Our lawyers specialize in employment contracts, restrictive covenants, and employment agreement negotiation.
Contact Us Today to Discuss Your Matter
Leave a Reply