As we reported in our April 10, 2019 E-lert on new Maryland employment laws, Maryland has enacted a Noncompete and Conflict of Interest Clauses (HB38/SB328) law covering low-wage workers. Under the new law, employers are prohibited from including a noncompete or conflict of interest provision in an employment contract with an employee earning $15 or less per hour or $31,200 or less annually. We noted an ambiguity in the language as to whether the pay thresholds were to be read together or should be applied separately. For example, if a part-time employee made $20 per hour, but less than $31,200 for the year, would it be permissible to require them to sign a noncompete?
On behalf of Shawe Rosenthal, the Maryland Chamber of Commerce (with whom our partners Elizabeth Torphy-Donzella, Fiona Ong and Lindsey White work closely to promote the interests of the business community before the General Assembly) reached out to the state Commissioner of Labor and Industry, Matthew Helminiak, regarding this question. Commissioner Helminiak informed the Chamber that he views the pay thresholds as speaking to the rate of pay and not total earnings. Thus, each threshold applies separately, and a part-time employee need only make more than $15 per hour in order to be exempt from the noncompete prohibition.
We thank the Maryland Chamber and Commissioner Helminiak for providing guidance to employers on this new prohibition.