Restrictive Covenants In Contracts In Maryland
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If it looks like a restrictive covenant is enforceable and is going to be breached by development, seek to obtain a restrictive covenant title indemnity insurance policy to cover any loss from a claim from a beneficiary. You should insure the full gross development value of the property affected.
The “Blue Pencil” Doctrine When the court blue pencils overbroad language in a non-compete agreement, it is only permitted to remove the offensive contractual language, not to supplement or to rearrange any of the language. See Fowler v. Printers II, Inc., 89 Md. App.
Effective Oct. 1, 2023, Maryland employers may not impose noncompete, conflict of interest, or similar agreements on employees that make $41,350 or less annually.
Restrictive Covenants, Explained This restricts how homeowners can manage and modify their land. Examples include restrictions on fence options, the type of animals allowed and the use of outbuildings, such as sheds.
If the non-compete agreement poses an undue hardship on the employee, Maryland courts may find it unenforceable. In conducting an undue hardship analysis, the court balances the legitimate business interests of the employer against the potential hardship the employee will experience.
Enforceability of Non-Competition Agreements in Maryland If the agreement is too broad or vague, it is unlikely that a court will enforce the agreement. When a non-competition agreement is challenged, Courts in Maryland will generally enforce the agreement only: Against an employee providing unique services.
To be enforceable, a restrictive covenant must be reasonably limited in duration. In some cases, a three year limitation might be acceptable, while, in other cases, one year would be too long. The restriction must also be sufficiently limited in a geographic scope.
In Maryland, a “noncompete . . . provision in an employment contract . . . that restricts the ability of the employee to enter into employment with a new employer or to become self-employed in the same or similar business or trade shall be null and void as against the public policy of the State.”
