New Maryland Law Places New Restrictions On Noncompete Agreements For Health Care And Veterinary Professionals

Restrictions on noncompete agreements in the state of Maryland for certain care-related industries have become substantially broader. Under Maryland's House Bill (HB) 1388, Maryland employers now face greater restrictions entering noncompete and conflict of interest agreements with both health care and veterinary professionals.

Maryland's new "Noncompete and Conflict of Interest Clauses for Veterinary and Health Care Professionals and Study of the Health Care Market Act" amends Maryland Code of Lab & Empl. § 3-716, which currently prohibits noncompete agreements for Maryland employees earning less than 150 percent of the state minimum wage (~$46,800 per year), to incorporate additional restrictions for health care and veterinary professionals.

Quick Hits

• Maryland's HB 1388 imposes greater restrictions on Maryland employers entering noncompete and conflict of interest agreements with both health care and veterinary professionals.
• HB 1388 prohibits restrictions for certain employees who are required to be licensed under the Health Occupations Article and certain employees who are licensed as a veterinary practitioner or veterinary technician under Title 2, Subtitle 3 of the Agriculture Article.
• HB 1388 takes effect on June 1, 2025.

HB 1388: Restrictions, Definitions, and Effective Date

Health Occupations Article

Specifically, HB 1388 prohibits restrictions for employees who:

• Are required to be licensed under the Health Occupations Article;
  • Employed in a position that provides direct patient care; and
  • Earn equal to or less than $350,000 in total annual compensation; or
• Are licensed as a veterinary practitioner or veterinary technician under Title 2, Subtitle 3 of the Agriculture Article

Maryland's Health Occupations Article requires licenses for a wide variety of health care professionals, including:

• audiologists, speech-language pathologists, and music therapists;
• chiropractors;
• dentists;
• dietician-nutritionists;
• massage therapists;
• morticians and funeral directors;
• nurses;
• nursing home administrators;
• occupational therapists;
• optometrists;
• pharmacists;
• physical therapists;
• physicians and physicians' assistants;
• podiatrists;
• professional counselors and therapists;
• psychologists;
• social workers;
• residential child care program professionals;
• environmental health specialists;
• acupuncturists.

The law also sets new parameters, albeit less restrictive, on covered employees earning more than $350,000 annually. Specifically, the law states than a noncompete or conflict of interest provision agreement must:

• Not exceed one year from the last day of employment;
• Not place any geographic restriction exceeding 10 miles from the primary place of employment; or
• Permit a patient to request and receive notice of the new location where the former employee will be practicing.

For covered health care professionals, HB 1388 takes effect on June 1, 2025.

Agriculture (Veterinary) Article

Similarly, the Agriculture Article defines veterinary professionals as follows:

• "Veterinary practitioner" means a licensed and registered veterinarian engaged in the practice of veterinary medicine. Md. Agriculture Code § 2-301(13)(h)(i)
• "Veterinary technician" means a person who is registered with the Board as a veterinary technician. Md. Agriculture Code § 2-301(13)(h)(ii)

For covered veterinary professionals, HB1388 takes effect earlier, on June 1, 2024.

Next Steps for the Health Care Commission

Lastly, HB 1388 requires that the Maryland Health Care Commission contract with a private consultant to study:

1. The effect of private equity firms on the health care market in the state;
2. The payer mix for physician practices and groups with private equity ownership;
3. The impact of hospital consolidations on physician practices;
4. The acquisition of physician practices; and
5. The impact on the ability of nonprofit hospitals and health systems to maintain access to care, including the ability to hire and retain physicians.

Key Takeaways

With the enactment of this new statute, Maryland health care and veterinary employers may need to consider taking a second look at their noncompete agreements and adjust their usage accordingly.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.