Frequently, employers require employees to sign non-compete agreements that limit an employee’s ability to find future employment. In Maryland, such agreements are enforceable if the agreements are reasonable. However, if the scope and/or duration are unreasonable or the non-compete agreement causes an undue hardship on the employee, the agreement may be unenforceable.
The U.S. District Court for the District of Maryland’s recent decision in Allied Fire Protection, Inc. v. Huy Thai, No. 17-551 (D. Md. 10/2/17), offers an example of an unenforceable non-compete agreement.
There, the employer filed suit to enforce a non-compete agreement that prevented the employee from “engag[ing] in any way business of a similar nature” to the employer’s business, either directly or indirectly, for five years. In response, the employee filed a motion to dismiss the employer’s lawsuit, which the court granted.
The court first determined that the scope of the non-compete was unenforceable because the language of the agreement would “restrict [the employee’s] ability to engage directly or indirectly in any type of engineering, consulting or general construction business anywhere within Maryland or for that matter, the world.” The court also noted that, in order to be enforceable, non-compete agreements must be “narrowly tailored."
Next, the court held that five years was unreasonable and unenforceable because the employer failed to provide any evidence or facts in support of such a long duration. The employer also failed to cite any case where a Maryland court upheld a non-compete agreement with a five-year duration.
Finally, the court found that the non-compete agreement caused the employee undue hardship and violated Maryland’s public interest because it prevented him from performing any similar work.
For the above reasons, the court granted the employee’s motion to dismiss and held that the non-compete agreement was not enforceable.
This case is important for employees because it serves as a reminder that not all non-compete agreements are enforceable.
If your employer is requiring that you sign a non-compete agreement or is trying to enforce an agreement that you signed, the attorneys at Lebau & Neuworth may be able to help. We are experienced in dealing with non-compete agreements and other employment related contracts such as these. For more information, contact us at 888-456-2529 or lebauneuworth.com/contact-us.