In a significant development for employers in Maryland, Senate Bill 591 has introduced modifications to the salary threshold that determines the permissibility of non-compete provisions in employment contracts.
As of January 1, 2024, Maryland employers are now prohibited from requiring employees earning $46,800 or less annually to enter into non-compete agreements. This represents a substantial increase from the previous threshold of $15.00 per hour or approximately $31,200 annually.
While the threshold is based on the minimum hourly wage, it still applies to exempt employees who are paid on a salary basis, and who are paid less than the $46,800 maximum.
The threshold will continue to increase automatically each year as wage limits inevitably change, and such protected employees may still be bound by non-solicitation agreements and other covenants to protect trade secrets or confidential information.
It’s crucial for employers to review employment contracts for any non-compete or conflict of interest provisions that violate the new threshold, as they are now invalid, even if an employee voluntarily entered into it. This review should also consider the upcoming minimum wage increase and subsequent rise in the non-compete threshold.
The new amendments signify a proactive approach to safeguarding employee rights and promoting fair employment practices.
If you have any questions about these changes or would like assistance in reviewing and updating your policies as it pertains to this change or any other HR needs, please contact me at edgar@officiumdc.com or schedule a time to talk here.