The Federal Trade Commission is moving forward to attempt to ban employer noncompete agreements nation-wide for most workers. The U.S. Chamber of Commerce has filed a lawsuit challenging the FTC action. Some states, including Maryland, already have passed legislation to ban or severely limit noncompetition agreements in employee contracts. As of the first of this year, Maryland’s ban on non-compete agreements, which is tied to MD’s minimum wage figure) expanded to include workers making up to approximately $46,800 annually. The FTC’s action could trigger a surge in trade secret protection litigation and patent filings, as businesses strive to protect their intellectual property against trade theft or other misuse by departing employees. Not all trade secrets are patentable due to eligibility rules, however.

Clients of Pels Law are advised to review their employment agreements and to carefully document when trade secrets are created and by whom. Nondisclosure and nonsolicitation agreements should still be valid and important ways employers can protect their intellectual property assets. Note that employers may not penalize a worker for seeking another job, because that would be tantamount to a non-competition agreement.

Do not hesitate to contact Pels Law and Jon Pels if we can be of service as the employment contract landscape continues to change.

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Maryland Labor & Employment Code section 3-716:
(a)(1) This section applies:
(i) to an employment contract or a similar document or agreement concerning an employee who earns equal to or less than 150% of the State minimum wage rate established under § 3-413 of this title; and
(ii) whether or not the employer and employee entered into the employment contract or similar document or agreement in the State.
(2) This section does not apply to an employment contract or a similar document or agreement with respect to the taking or use of a client list or other proprietary client-related information.
(b) 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.