Maryland restricts healthcare provider noncompetes, bans veterinarian and vet tech noncompetes

On June 1, Maryland will restrict the use of noncompetes for physicians and other healthcare providers, while banning them entirely for veterinarians and vet techs.

As you may recall, Maryland was one of the 31 states considering bills modifying noncompete laws. More specifically, Maryland was one of 17 states considering bills to ban or restrict noncompetes for healthcare providers and one of the three states considering banning veterinarian noncompetes.

Well, on April 25, Maryland Governor Wes Moore signed a bill that adds new industry-specific exemptions.

Here’s what you need to know…

Existing exemption

Back in 2019, Maryland banned noncompetes and conflict-of-interest provisions for low-wage workers. That ban became effective on October 1, 2019.

In 2023, Maryland updated the threshold. Specifically, effective, October 1, 2023, the threshold increased to apply to anyone earning at or below 150% of state minimum wage, excluding overtime. (That threshold equates to $22.50 per hour, which is roughly $46,800.)

That low-wage worker ban remains in place.

New exemptions

The new law will create new exemptions from noncompetes and conflict-of-interest provisions for workers in two industries.

Firstveterinarians and vet techs will soon be exempt from noncompetes and conflict-of-interest provisions.

Second, healthcare providers licensed under Maryland’s Health Occupations Article who provide direct patient care will either be exempt from noncompetes and conflict-of-interest provisions, or their noncompetes and conflict-of-interest provisions will be subject to new limitations.

That difference in treatment turns on whether the provider earns more than $350,000.

At or below the wage threshold, affected healthcare providers will be exempt from noncompetes and conflict-of-interest provisions.

Above the wage threshold, physicians and other healthcare providers will not be exempt. But their noncompetes and conflict-of-interest provisions will be subject to new bright-line limitations on their duration and geographic reach.

That means that the following providers, if they provide direct care to patients and earn less than or equal to $350,000, will be exempt from noncompetes and conflict-of-interest provisions:

  • acupuncturists
  • audiologies
  • hearing aid dispensers
  • speech-language pathologists
  • music therapists
  • chiropractors
  • dentists
  • licensed dietitian-nutritionalists
  • massage therapists
  • morticians
  • funeral directors
  • nurses
  • nursing home administrators
  • occupational therapists
  • optometrists
  • pharmacists
  • physical therapists
  • physicians
  • physician assistants
  • podiatrists
  • professional counselors and therapists
  • psychologists
  • social workers
  • resident child care program professionals
  • environmental health specialists

In contrast, those same healthcare providers who earn above $350,000 may continue to have noncompetes and conflict-of-interest provisions, but the noncompetes and conflict-of-interest provisions will need to be limited to one year following employment and will not be permitted to exceed ten miles from the individual’s primary place of employment.

Further, if a patent asks where the former employee will be practicing, the former employer must provide that information.

Timing of the new exemptions

The new limitations applicable to healthcare providers cover agreements executed on or after July 1, 2025.

The timing of the ban on veterinarian and vet tech is not as clear.

The statute becomes effective June 1, 2024. As a result, there is little doubt that there can be no new veterinarian or vet tech noncompetes or conflict-of-interest provisions as of that date. But the open question is whether pre-existing contracts with veterinarians and vet techs will be retroactively voided or remain in place.

Study of private equity impact

The new law also requires the Maryland Health Care Commission to retain a private consultant to study the impact of private equity firms on the healthcare industry and to make findings and recommendations to the Senate Finance Committee and the House Health and Government Operations Committee by January 1, 2025.

Text of the amended statute

The text of Title 3 of Maryland’s Code Annotated for Labor and Employment, Section 3-716, will, on June 1, 2024, read as follows:

(a) (1) This subsection applies:

(i) to an employment contract or a similar document or agreement concerning:

1.  an employee who earns equal to or less than 150% of the State minimum wage rate established under § 3–413 of this title;

2. employment in a position for which the employee:

A. is required to be licensed under the Health Occupations Article;

B. is employed in a position that provides direct patient care; and

C. earns equal to or less than $350,000 in total annual compensation; or

3. an employee licensed as a veterinary practitioner or veterinary technician under title 2, subtitle 3 of the Agriculture Article; and

(ii) whether or not the employer and employee entered into the employment contract or similar document or agreement in the State.

       (2) This subsection does not apply to an employment contract or a similar document or agreement with respect to the taking or use of a client or patient list or other proprietary client-related or patient-related information.

       (3) A noncompete or conflict of interest provision in an employment contract or a similar document or agreement that restricts the ability of an employee to enter into employment with a new employer or to become self-employed in the same or similar business or trade shall be null and void as being against the public policy of the State.

(b) (1) This subsection applies only to an employment contract or similar document or agreement concerning employment in a position for which the employee:

(I) is required to be licensed under the Health Occupations Article;

(II) is employed in a position that provides direct patient care; and

(III) earns more than $350,000 in total annual compensation.

       (2) (I) The period for which a noncompete or conflict of interest provision in an employment contract or similar document or agreement is in effect may not exceed 1 year from the last day of employment.

(II) The geographical restriction in a noncompete or conflict of interest provision in an employment contract or similar document or agreement may not exceed 10 miles from the primary place of employment.

       (3) On request of a patient, an employer of an employee described in paragraph (1) of this subsection shall provide notice to a patient of the new location where a former employee will be practicing.

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Additional resources: 

We know how hard it is to keep up with the ever-changing requirements around the country. To help, we have created the following resources (available for free):

We hope you find all of these resources useful. More are coming.

And please note that we are grateful for all of the input we’ve received over the years, and welcome any suggestions for improvements that you may be willing to share.

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*A huge thank you to Erika Hahn for all of her extraordinary help in tracking and monitoring all of the bills around the country and helping me make sure that all of our resources are current and accurate.