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Covenants not to Compete in Maryland

Covenants not to Compete in Maryland

Covenants not to compete ("non-competes" or "restrictive covenants") arise in several contexts. Employers often require employees to sign non-competes when they begin work with a company. Businesses frequently request covenants not to compete when they work with other businesses, such as in Government subcontracts or franchise agreements. Likewise, the buyer of a business will usually make it a condition of the purchase that the seller/former owner not compete with the business that is sold.

Courts considering covenants not to compete approach them in the context of a public policy that generally disfavors agreements in restraint of trade. However, there are countervailing public policies that outweigh this general preference. For example, courts recognize that some businesses encourage their employees to promote customer loyalty by developing personal relationships with clients and that it would be unfair to allow the employees to divert the business that comes from those relationships to a competitor. Similarly, courts understand the importance of protecting businesses' investment in specialized training or trade secrets that would allow a departing employee to harm the employer if he/she defected to a competitor. Nevertheless, in all circumstances, non-competes must be reasonable in time, geography, and scope, and must be narrowly tailored to protect the business interest of the employer/protected business. Courts that find a covenant to be too broad can either refuse to enforce it or, under limited circumstances, pare it down.

Because every case is different, it is impossible to draft a "form" of non-compete agreement that will work for every client and every circumstance. Each covenant is judged on its own merits depending on the business circumstances. That means that whether you are looking to enforce a covenant not to compete or are the subject of a threat of enforcement, you will need an attorney who is well-versed in this aspect of the law to examine the covenant in the context of your specific situation.

If you need help with this complex area of the law or the assistance of an experienced Maryland Civil Litigation Attorney, call our office today to schedule a consultation and discuss your case.