Strict Maryland Law Imposes Fresh Limitations on Vet, Health Nonprofits
TL/DR –
Maryland’s House Bill (HB) 1388 has expanded restrictions on noncompete agreements for both health care and veterinary professionals. The bill, set to become effective on June 1, 2025, prohibits restrictions for employees who are required to be licensed under the Health Occupations Article and earn equal to or less than $350,000 in total annual compensation, as well as those licensed as a veterinary practitioner or technician under Title 2, Subtitle 3 of the Agriculture Article. The bill also sets new parameters for employees earning more than $350,000 annually and requires the Maryland Health Care Commission to contract a private consultant to study the effects of private equity firms on the state’s health care market.
Maryland House Bill Expands Noncompete Restrictions for Health and Veterinary Professionals
More noncompete restrictions are now imposed on Maryland employers in health care and veterinary sectors, following the broadening of House Bill (HB) 1388. The new “Noncompete and Conflict of Interest Clauses for Veterinary and Health Care Professionals and Study of the Health Care Market Act” imposes significant changes on Maryland Code of Lab & Empl. § 3-716, which originally prohibited noncompete agreements for employees earning less than 150% of the minimum wage.
Key Points of HB 1388
- Greater noncompete restrictions for Maryland employers in health care and veterinary fields.
- Prohibition of restrictions for employees licensed under the Health Occupations Article and those licensed as veterinary practitioners or technicians under Title 2, Subtitle 3 of the Agriculture Article.
- Effective date: June 1, 2025.
View the complete HB 1388 here.
Who is Affected?
HB 1388 targets employees who:
- Require licensing under the Health Occupations Article.
- Provide direct patient care.
- Earn $350,000 or less in total annual compensation.
- Are licensed as veterinary practitioners or technicians under Title 2, Subtitle 3 of the Agriculture Article.
Licensing Requirements for Various Health Care Professionals
Professionals needing licenses under the Health Occupations Article include, but are not limited to, audiologists, speech-language pathologists, massage therapists, nurses, occupational therapists, and acupuncturists among others.
New Parameters for Higher Earning Employees
For employees earning more than $350,000 annually, noncompete or conflict of interest provisions must not exceed one year from last day of employment, place any geographic restriction exceeding 10 miles from the main workplace, or prohibit a patient from receiving the new location of the former employee’s practice.
Effective Dates
For health care professionals, HB 1388 is effective from June 1, 2025. Veterinary professionals will see changes from June 1, 2024.
The Maryland Health Care Commission’s Role
The Commission must hire a private consultant to study the impact of private equity firms on the health care market, evaluate the payer mix for medical practices with private equity ownership, assess the effects of hospital consolidations on medical practices, study the acquisition of medical practices, and analyze the impact on nonprofit hospitals’ ability to maintain care access and retain physicians.
What does this mean for Employers?
With the enactment of this new statute, Maryland health care and veterinary employers may need to revisit their noncompete agreements and adjust accordingly.
Further developments will be monitored by the Unfair Competition and Trade Secrets and Healthcare practice groups. Stay updated on the Unfair Competition and Trade Secrets blog and Healthcare blog.
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