Maryland Imposes Limits on Non-Compete and Conflict of Interest Clauses for Veterinarians and Healthcare Professionals

This year, Maryland enacted a law expanding restrictions on the enforceability of non-compete and conflict of interest provisions in employment contracts with veterinarians and certain healthcare professionals. This builds on the state’s existing law voiding non-compete provisions for employees earning equal to or less than 150% of the state’s minimum wage, or $22.50 per hour ($46,800.00 annualized). In the same bill, Maryland directed its Health Care Commission to study the effect of private equity firms and merger and acquisition activity on the healthcare market within the state.

Veterinarians

The Maryland Labor and Employment Code now voids any non-compete or conflict of interest clause in an employment contract or similar agreement that restricts a veterinary practitioner’s or veterinary technician’s ability to work for a new employer or to become self-employed in a similar business or trade. The statute is effective June 1, 2024, but it is ambiguous as to whether it applies retroactively to agreements entered into prior to that date.

Healthcare Professionals

Beginning July 1, 2025, the law also voids non-compete or conflict of interest clauses that restrict the ability of certain healthcare workers to work for a new employer or become self-employed in a similar business or trade, aligning their protections with those given to veterinarians. The limitation applies only to healthcare professionals who (1) are required to be licensed under the Health Occupations Article (including physicians, physician assistants, nurse practitioners, nurses, dentists, pharmacists, psychologists, optometrists, social workers, nursing home administrators, and massage therapists), (2) provide direct patient care, and (3) earn $350,000 or less in total annual compensation.

For those healthcare professionals who provide direct patient care and earn more than $350,000, non-compete agreements may be enforceable if they (1) are limited to one year from the healthcare professional’s last day of employment and (2) and have a geographic scope of no more than 10 miles from the primary place of employment. Additionally, if a patient requests it, the former employer must inform them of the former employee’s new practice location.

The statute expressly provides that, as to healthcare professionals, it applies only to agreements executed on or after July 1, 2025. It therefore does not have retroactive effect.

Exception For Client Lists and Proprietary Information

The statute specifically exempts from its restrictions agreements limiting an employee’s ability to take or use client or patient lists, or other proprietary client-related or patient-related information.

Study of the Impact of Private Equity and M&A on Maryland’s Health Care Market

In the same bill voiding non-compete provisions with certain healthcare professionals, Maryland directed its Health Care Commission to study, among other things, (1) private equity’s effects on Maryland’s healthcare market, (2) the payer mix for physician practices and groups owned by private equity firms, (3) the impact of hospital consolidations on physician practices, and (4) the acquisition of physician practices. The Health Care Commission must report on the study’s findings on or before January 1, 2025.

Looking Ahead

Employers of veterinarians or healthcare professionals in Maryland should evaluate their restrictive covenants for enforceability. Such employers may consider using other tools such as confidentiality agreements to protect their confidential information and customer relationships.

If you have any questions or need advice, please reach out to one of Honigman’s Labor and Employment attorneys here.