Maryland has officially joined the growing list of states limiting the use of non-compete agreements for healthcare professionals. Starting July 1, 2025, a new law will make many non-compete and conflict of interest clauses unenforceable for certain healthcare and veterinary workers across the state.

If your business is located in Maryland, or if you’re a healthcare employer in Baltimore or Towson, now is the time to take a closer look at your employment agreements and think through how this change might impact your current contracts and future hires.

Let’s break down what this law covers, who it applies to, and what you can start doing now to stay ahead of the deadline.

The Basics: What the New Law Does

Maryland House Bill 1388 (HB 1388) amends the state’s Labor and Employment Code to limit or prohibit non-compete and conflict of interest provisions in contracts for a wide group of licensed healthcare and veterinary professionals. These changes reflect a broader trend across the country to restrict the use of non-compete agreements—especially in industries like healthcare, where workforce shortages and patient access are major concerns.

The new rules don’t apply to every type of employee, and there are some exceptions, mostly based on salary and licensing. But for many employers in the healthcare space, this will require some real changes to how employment contracts are structured going forward.

Who the Law Applies To

This law focuses on healthcare professionals who are licensed under Maryland’s Health Occupations Article and provide direct patient care. That includes physicians, physician assistants, nurses, dentists, counselors, therapists, and other similar roles where the employee is directly interacting with patients.

Veterinary professionals are also covered under a different section of the law. In fact, veterinary practitioners and veterinary technicians are affected slightly earlier—the non-compete ban for that group kicks in on June 1, 2024.

To figure out if the ban applies to your employees, you’ll need to look at two key factors:

1. Does the employee provide direct patient care or veterinary services?
2. What is their total annual compensation?

If an employee meets those criteria, and they earn $350,000 or less per year, then non-compete and conflict of interest provisions will not be enforceable at all, starting July 1, 2025.

For employees earning more than $350,000, employers can still include non-compete language, but only with strict limitations. The restrictions can’t last more than one year from the last day of employment and must be limited to a 10-mile radius from the employee’s primary place of work.

There’s also an added responsibility for employers: if a patient asks where a former employee is now practicing, and that employee was subject to a non-compete, you’ll be required to share that information.

What Counts as a Non-Compete or Conflict of Interest Clause?

The law uses broad language. Any contract language that restricts an employee from working for a competitor or starting a similar business after they leave your practice could fall under this new ban.

Conflict of interest clauses are also included if they function like a non-compete—meaning they block someone from continuing their profession somewhere else in the same field.

On the other hand, the law specifically does not ban confidentiality agreements or rules about using patient lists or proprietary business information. Non-solicitation clauses are also still allowed, which means employers can still prevent former employees from directly recruiting patients or staff after leaving.

Does This Apply to Current Employment Contracts?

The new law will only apply to contracts signed on or after July 1, 2025. This means your existing non-compete clauses won’t suddenly become invalid overnight. That said, employers should still be thinking about how this change could affect employee relations.

You could run into issues if your newer hires are offered more flexible or less restrictive contracts than employees who have been with you longer. It’s not hard to imagine how that might cause friction among your team, so it’s worth considering whether it makes sense to revisit existing agreements before the law goes into effect.

How This Connects to the National Non-Compete Conversation

Maryland’s move comes at a time when the Federal Trade Commission (FTC) is also working to eliminate non-compete agreements across many industries. While the FTC’s rule is still being challenged and doesn’t apply to nonprofit healthcare organizations, Maryland’s law adds another layer of protection that applies statewide no matter what happens at the federal level.

This law reflects a broader shift in employment law. Legislators are focusing more on employee mobility, competition in the job market, and access to care. Maryland’s healthcare system is no exception.

What Employers in Maryland, Baltimore, and Towson Should Do Now

With a little over a year until the law takes effect, employers have time to prepare, but not forever. Here's what you can start doing now:

• Review your current employment contract templates for healthcare and veterinary staff.
• Identify which employees are likely to fall under the new compensation thresholds.
• Decide whether you’ll revise existing agreements to keep things consistent across your team.
• Make sure your non-solicitation and confidentiality clauses are strong enough to protect your business interests without relying on a non-compete.

It’s also a good idea to stay in touch with an experienced employment attorney who can help you interpret the law as it gets closer to the enforcement date and help you avoid any unintentional missteps.

Preparing Your Maryland Healthcare Practice for the Non-Compete Ban

The new healthcare non-compete law in Maryland is a major shift for employers and employees alike. Whether you’re based in Baltimore, Towson, or elsewhere in Maryland, it’s important to start thinking now about how your business will adapt. While the law is focused on healthcare and veterinary professionals, it reflects a larger movement that may continue to expand across other industries.

At Lebau & Neuworth, we help businesses navigate changing employment laws and revise contracts that align with new regulations. If you’re unsure how this law will affect your workplace or want help preparing updated agreements, we’re here to help.

Let’s make sure your business is ready when July 2025 rolls around.

At Lebau & Neuworth, we are proud to stand up for employees who are denied fair compensation, and we’re thrilled to share another significant victory.

The Case: Ward v. IBM

Tammy Ward dedicated more than 30 years to IBM, excelling in her role as a sales representative for IBM services. Her outstanding performance brought millions of dollars in revenue to the company and earned her well-deserved recognition. However, after closing two major deals, IBM refused to pay her the incentive compensation she had rightfully earned.

Ms. Ward did everything she could to resolve the issue within IBM’s internal channels. When those efforts were met with silence and resistance, she turned to us. We filed a lawsuit on her behalf in federal court in Maryland: Ward v. International Business Machines Corporation, Case No. 1:24-cv-00685-BAH (D. Maryland).

IBM Tried to Dismiss the Case - Twice. They Failed.

IBM filed two separate motions to dismiss the case, arguing that Ms. Ward’s claims were not legally valid. The federal court rejected all of IBM’s arguments in a detailed and decisive opinion.

Key Legal Victories for Employee Rights

The Court’s decision is a powerful affirmation of workers’ rights in Maryland. Here are the highlights:

1. Claims Under the Maryland Wage Payment and Collection Law (MWPCL):

This law protects employees’ rights to receive timely and full payment of wages, which are broadly defined to include commissions, bonuses, fringe benefits, and other compensation promised for services rendered.

IBM argued that Ms. Ward’s commissions weren’t “wages” because the company retained full discretion over incentive compensation. The Court firmly rejected that argument, finding that IBM did not have absolute discretion to deny payment for commissions that were already earned.

2. Breach of Contract:

The Court ruled that Ms. Ward had successfully stated a breach of contract claim. IBM’s reliance on a so-called disclaimer in its compensation documents wasn’t enough to defeat her right to pursue the claim.

3. Unjust Enrichment and Promissory Estoppel:

The Court also allowed Ms. Ward’s common law claims to go forward. Unjust enrichment occurs when one party benefits from the work of another without providing fair compensation. Promissory estoppel prevents a party from going back on a promise that someone else relied on to their detriment.

Both claims reflect the basic principle that promises made, especially in the workplace, must be honored.

What This Means for Workers

This case is a major step forward for employee rights in Maryland. It reinforces the importance of employers paying what they promise. Period.

If you’ve been denied fair wages, commissions, or other earned compensation, you don’t have to fight alone. We’re here to help.

Let us stand up for your right to be paid.

Reach out to Lebau & Neuworth at https://lebauneuworth.com to learn more about your rights and how we can

We are very proud to announce that the Women's Law Center of Maryland has awarded Richard P. Neuworth, a distinguished employment law attorney at Lebau & Neuworth, LLC, the Access to Justice Award. This prestigious recognition highlights his dedication to expanding access to legal resources and tireless advocacy for Maryland workers.

According to the Women’s Law Center of Maryland, since joining the Employment Law Hotline in 2021, Mr. Neuworth has volunteered for nearly 70 shifts, dedicating countless hours to helping Marylanders navigate employment law challenges. His deep expertise in employment law has been a crucial resource for workers facing discrimination, wage theft, and other workplace injustices.

The 2025 Awards Night of the Advocate will be held on Tuesday, May 6, 2025, at Rye Street Tavern in Baltimore, where Mr. Neuworth will be officially honored for his contributions alongside an outstanding group of advocates dedicated to protecting and advancing legal rights for women and families across Maryland.

Join us in celebrating this special occasion! Learn more and register here.

A Commitment to Justice in Employment Law

At Lebau & Neuworth, we are dedicated to protecting the rights of employees and individuals throughout Maryland. Our firm specializes in:

Employment Law – Fighting against workplace discrimination, wrongful termination, and wage theft.

Civil Rights & Discrimination – Ensuring fair treatment in all aspects of employment and beyond.

Employee Benefits & Workplace Rights – Advocating for workers’ rights under federal and state laws.

Personal Injury & Malpractice – Holding wrongdoers accountable for negligence and harm.

Richard Neuworth’s recognition is a testament to his unwavering commitment to justice and his passion for empowering workers with the legal knowledge they need.

We congratulate Mr. Neuworth on this well-deserved honor and celebrate his ongoing dedication to advocating for workplace fairness!

Lebau & Neuworth attorneys frequently represent whistleblowers who report fraud, waste, and abuse within local, state, and federal government agencies. Because the Lebau & Neuworth attorneys are experts in employment law, they are equipped to advise employees on job protections and the significant monetary recoveries possible under whistleblower laws.

The federal False Claims Act is an important tool for whistleblowers to report fraud against the federal government. In 2024, the False Claims Act (FCA) continued as a pivotal instrument for the U.S. Department of Justice (DOJ) in combating fraud against federal programs. The fiscal year saw significant recoveries, landmark legal decisions, and a surge in whistleblower activities, underscoring the Act’s continuing relevance.

Record Recoveries and Enforcement Actions

The DOJ reported that FCA settlements and judgments exceeded $2.9 billion in fiscal year 2024. This substantial sum reflects the government’s determination to safeguard public funds. Notably, healthcare fraud remained a predominant focus, with recoveries restoring funds to programs such as Medicare, Medicaid, and TRICARE. These efforts not only recuperate financial losses but also help protect patients from medically unnecessary or potentially harmful actions. (1)

Increase in Whistleblower Initiatives

Whistleblowers, or qui tam relators, played an instrumental role in FCA enforcement throughout 2024. A record of 979 qui tam suits were filed, leading to whistleblowers collecting over $400 million for their efforts in exposing fraud and false claims. This increase highlights private individuals' critical role in assisting the government in identifying and prosecuting fraudulent activities. (2)

Noteworthy Settlements and Legal Actions

Among numerous developments, several high-profile settlements and legal actions in particular, marked the year. 

Walgreens Boots Alliance: 

The pharmacy chain agreed to pay $106.8 million to resolve allegations of submitting false claims to federal healthcare programs between 2009 and 2020. The Department of Justice stated that Walgreens billed Medicare, Medicaid, and other programs for prescriptions that were processed but never picked up by patients. Despite acknowledging a software error that caused these incorrect billings, Walgreens corrected the issue, reported it, and voluntarily refunded all overpayments. (3)

Dell Technologies: 

The company settled for $2.3 million over allegations of overcharging the U.S. Army on government contracts. The allegations stated that Dell and its reseller colluded by inflating prices, which created a false appearance of competition. (4)

Novartis Pharmaceuticals: 

A U.S. appeals court reinstated a whistleblower lawsuit accusing Novartis of paying illegal kickbacks to doctors to promote their multiple sclerosis drug, Gilenya. The allegations suggest that Novartis organized sham speaker events, offering extravagant dinners for the promotion of the medication, leading to fraudulent claims to government health insurance programs. (5)

CVS Pharmacy: 

The DOJ filed a civil complaint against CVS, accusing the company of filling unlawful prescriptions violating the Controlled Substances Act and seeking federal healthcare reimbursements in breach of the FCA. The complaint alleges that CVS dispensed dangerous and excessive quantities of opioids and filled prescriptions from known “pill mill” prescribers, which ignored important warning signs from pharmacists and internal data. (6)

Judicial Developments

The Supreme Court case, Wisconsin Bell, Inc. v. United States ex rel. Heath addressed the application of the FCA to fraudulent representations made to private administrators of government programs. The Court held that these actions are prosecutable under the FCA as long as the disbursed funds originated partly from the government. (7)

Conclusion

Overall, 2024 underscored the FCA’s critical role in deterring fraud against federal programs. With record numbers of recoveries, increased whistleblower participation, and significant legal proceedings, the Act continues to be a cornerstone of government efforts to maintain the integrity of public funds and programs.

Takeaways from the start of 2025:

Bringing us into 2025, the False Claims Act (FCA) landscape has already been shaped by significant legal developments, enforcement actions, and policy shifts.

Notable Legal Developments

Supreme Court Ruling:

In Wisconsin Bell, Inc. v. United States ex rel. Heath, the Supreme Court unanimously held that fraudulent representations made to private administrators of government programs are prosecutable under the FCA, so long as the disbursed funds originate from the government, at least in part. (8)

Administrative False Claims Act (AFCA): 

Enacted as part of the FY 2025 National Defense Authorization Act, the AFCA empowers federal agencies to directly pursue administrative FCA actions for claims aggregating up to $1 million. This shift aims to expedite the resolution of smaller fraud cases without necessitating Department of Justice involvement. (9)

Enforcement Actions

Walgreens Lawsuit:

The Department of Justice filed a lawsuit against Walgreens, alleging the pharmacy chain filled millions of illegitimate prescriptions, including opioids over the past decade. The complaint declares that Walgreens pharmacists were pressured to fill prescriptions without proper verification, which contributes to the opioid crisis. (10)

Regeneron Pharmaceuticals:

The 1st U.S. Circuit Court of Appeals ruled that the government is required to demonstrate that any alleged kickbacks directly caused Medicare to make payments it otherwise would not have made. This decision raises the burden of proof in the government’s lawsuit accusing Regeneron of using a charity to subsidize co-payments for its eye drug, Eylea. (11)

Policy Trends

DOJ’s Commitment to FCA Enforcement:

The Department of Justice has reaffirmed its dedication to aggressively enforcing FCA, which highlights its application against illegal trade practices. 

The DOJ reported a record number of qui tam, or whistleblower actions, filed in 2024, with 979 cases—a 37% increase over the year before. (12) These developments underscore the FCA’s evolving role in combating fraud against federal programs. This reflects both judicial interpretations and legislative amendments focused on enhancing the efficiency of enforcement. 

Sources

1.) False Claims Act Settlements and Judgments Exceed $2.9B in Fiscal Year 2024, Archives, Department of Justice 

2.) False Claims Act Settlements and Judgments Exceed $2.9B in Fiscal Year 2024, Bradley, Financial Services Perspectives 

3.) Walgreens to Pay $106.8 Million Over Alleged Fraudulent Healthcare Billings, Wall Street Journal

4.) Dell pays $2.3 million to settle claims that it overcharged the US Army for Computers, Business Insider

5.) Novartis must face claims it paid kickbacks to promote MS drug, US appeals Court Rules, Reuters

6.) DOJ files complaint against CVS for facilitating unlawful sale of prescription opioids, AP News

7.) & 8.) Wisconsin Bell, Inc. v. United States ex rel. Heath, Wikipedia

9.) Federal Agencies Can Now Directly Pursue FCA Cases Up to $1M, Sidley blog

10.) US accuses Walgreens of filling millions of illegitimate prescriptions, including for opioids, AP News

11.) US must meet tougher standard in Regeneron kickback lawsuit, Reuters

12.) DOJ Affirms Aggressive False Claims Act Enforcement, Highlights Use Against Illegal Trade Practices, Wiley Law

In examining the legal developments surrounding employment non-compete agreements, the year 2024 began with considerable momentum in efforts to regulate them at the federal level. However, this initial energy faded into insignificance as the year progressed, while substantial restrictions emerged under state law. To better understand the landscape, let's define some key terms and delve deeper into the specifics.

A non-compete agreement, also known as a covenant not to compete, is a commitment typically found in business sales, partnerships, or employment contracts. It prohibits an individual from engaging in similar business activities within a specified timeframe and geographic area relative to the buyer, partner, or employer. These non-competition covenants are recognized as valid mechanisms to safeguard business goodwill during a company's sale. 

In employment scenarios, however, requirements that restrict an employee from pursuing certain types of work after leaving their position are often viewed as restraints of trade and are generally disfavored. Courts tend to enforce such agreements only for the duration of the employment relationship, and any restrictions that extend beyond that must be reasonable in terms of scope, duration, and geographic reach. 

This can also be referred to as a noncompetition agreement, non-compete covenant, restrictive covenant, covenant in restraint of trade, promise not to compete, contract not to compete," to quote a definition from Bryan Garner's Black Law Dictionary. How do non-competes enter into law developments since the beginning of this year?

At The Federal Level – Drama, But No Climax 

With great fanfare on April 24, 2024, the Federal Trade Commission issued a final ruling "to promote competition by banning non-competes nationwide, protecting the fundamental freedom of workers to change jobs, increasing innovation, and fostering new business formation." The Rule was enjoyed less than three months later by a federal court in Texas in a lawsuit filed by the U.S. Chamber of Commerce, which described the court result as a "big win against government micromanagement of business decisions" and one that "sets a dangerous precedent where the government knows better than the markets."

The drama ended on December 10, 2024, when the incoming Trump administration announced the intended nomination of FTC member Andrew Ferguson as the Commission's Chair. Ferguson had vigorously dissented against the FTC's proposed non-compete ban. Therefore, the federal executive branch will not take any action to limit the application of restrictive covenants in employment contracts for the time being, and action at the congressional level is even less likely.

At The State Level – Some Progress

Maryland first enacted limitations on non-competes in 2019, when the state passed a complete ban on non-competes for those who earned less than $15/hr or $31,200 annually (Maryland Labor & Empl. Code § 3-716 (20190). In 2024, Maryland Labor & Empl. Code Ann. § 3-716 was amended to provide some limitations on using employment-related restrictive covenants. The key takeaways from the amendments are as follows:

1. Non-competes Banned For Workers Making Less Than $22.50/hr - Labor & Empl. Code Ann. § 3-716(a)(1)(i)(1).

Maryland's prohibition on non-competes continues for workers earning less than 150% of the state's minimum wage, or $22.50, based on the now $15/hr State minimum wage. The statutory provision no longer requires an annual earning requirement. The Maryland minimum wage is not set to increase in 2025.

2. Non-competes Banned For Veterinarians and Technicians - Labor & Empl. Code Ann. § 3-716(a)(3).

Effective June 1, 2024, Maryland enacted a complete ban on all non-competes for veterinarians and vet techs licensed under Title 2, Subtitle 3 of the Agriculture Article.

 3. Starting in July 2025, Non-competes will be Banned For Certain Health Care Professionals

Certain healthcare professionals will soon enjoy enhanced protections against non-compete agreements. The recent amendment to Section 3-716 introduces restrictions on non-compete clauses for licensed workers under the Maryland Health Occupations Article, including physicians, dentists, nurses, mental health counselors, and others in similar roles. These new restrictions will take effect on July 1, 2025.

The amendments are two-tiered in approach:

•Professionals Making $350,000 or Less

A non-compete is unenforceable for healthcare professionals who provide direct patient care and earn $350,000 or less. Labor & Empl. Code § 3-716(a)(i)(1)(2)(b).

•Professionals Making More Than $350,000

Healthcare professionals making more than $350,000 can be subjected to non-compete agreements so long as the professional provides direct patient care and the restriction is either more than one year in duration or 10 miles in geographic scope from the professional's principal place of employment. Labor & Empl. Code § 3-716(b). The terms "principal place of employment" and "direct patient care" remain undefined in the statute, and no private cause of action is available. As a result, the responsibility for interpreting and enforcing these terms falls entirely on the courts. Importantly, employers still have the option to establish non-solicitation and confidentiality agreements for employees who cannot be subjected to non-compete clauses. However, it is essential to recognize that courts may nullify excessively broad non-solicitation or confidentiality agreements that essentially operate as non-compete agreements.

Court Rulings

There were no significant non-compete case law developments in 2024, but two cases are worth noting for their discussion regarding the "blue-penciling" of restrictive covenants.

The first case of note is FTI Consulting, Inc. v. Orszag, 2024 U.S. Dist. LEXIS 220876 (D. Md. December 5, 2024), in which an employer sued their former senior executive, an economist, and a final consultant for breach of a non-compete and a non-solicitation provision. To say that there was acrimony between the parties during and after the employment relationship would be an understatement. The non-compete restricted the executive from competing in any consulting role in numerous countries, including the U.S., the U.K., continental Europe, Israel, Chile, China, Singapore, Argentina, and any country where the employer had an office. 

The Court, viewing this restriction as potentially too broad, asked each party to submit "blue-penciling" to limit the scope of the noncompete. The employer gave a proposal that limited the noncompete to the U.S. and U.K., which was specified only for economic consulting. The Court approved the proposal, which satisfied the limited circumstances when blue-penciling is allowed. 

Quoting from an earlier case, the Court stated: "If a restrictive covenant is unnecessarily broad, a court may blue-pencil or excise language to reduce the covenant's reach to reasonable limits. A court may not, however, rearrange or supplement the language of the restrictive covenant to precipitate a properly tailored revision. A court can only blue-pencil a restrictive covenant if the offending provision is neatly severable. A court may not excise the dominant language or words from a covenant part of a single indivisible promise. Nor can a court supplement, rearrange, or otherwise rewrite the language of the restrictive covenant."

The second case is Blue Ridge Risk Partners, LLC v. Willem, 2024 U.S. Dist. LEXIS 48921 (D. Md. March 19, 2024), which involved an employer trying to enforce its restrictive covenants against a departed executive who went to work for a competitor where much of her book of business followed. Specifically, the Court ruled that prohibitions against "passively accepting" business from all its customers and prospective customers, without consideration of whether the executive did business with them, were overly broad and, therefore, unenforceable." The Court refused to blue-line the covenants as suggested by the employer to more precisely define a client and not to include prospective clients, stating: "Blue Ridge's proposal removes 65% of the words within the provision and rewrites the clause, as opposed to merely removing a severable portion. If the Court were to permit this form of blue-penciling, employers would be disincentivized from negotiating fair and reasonable restrictive covenants initially.

Looking Ahead

The FTC's ruling in April 2024 can be seen as part of a larger movement to enhance worker mobility at both the federal and state levels. The federal government has signaled its intention to scrutinize and contest worker rights restrictions, aligning with the current administration's dedication to enforcing antitrust laws in labor markets. However, it's important to note that changes in policy direction could occur with upcoming presidential transitions in Washington.

Lebau & Neuworth attorneys regularly represent workers in non-compete negotiations and disputes. Contact us should you need assistance.