New Maryland law places new restrictions on vet, health care Nonc

Restrictions on non-compete agreements in the state of Maryland for certain care-related industries have become significantly broader. Under Maryland House Bill (HB) 1388, Maryland employers now face greater restrictions on entering into non-compete and conflict-of-interest agreements with health care and veterinary professionals.

Maryland’s “New Non-Competition and Conflict of Interest Clauses for Veterinary and Health Care Professionals and the Study of Health Care Market Law” amends the Maryland Code of Lab and Empl. § 3-716, which currently prohibits non-compete agreements for Maryland employees earning less than 150 percent of the state minimum wage (~$46,800 per year), to include additional restrictions for health care and veterinary professionals.

Quick hits

• Maryland’s HB 1388 imposes greater restrictions on Maryland employers entering into non-compete and conflict-of-interest agreements with health care and veterinary professionals.
• HB 1388 prohibits restrictions on certain employees who are required to be licensed under the Health Professions Article and certain employees who are licensed as veterinarians or veterinary technicians under title 2, subtitle 3 of the agriculture article.
• HB 1388 takes effect on June 1, 2025.

HB 1388: Limitations, Definitions and Effective Date

Article for health professions

Specifically, HB 1388 prohibits restrictions on employees who:

• They are required to be licensed under the Health Professions Article;
  • Employed in a position providing direct patient care; AND
  • Earn equal to or less than $350,000 in total annual compensation; OR
• You are licensed as a veterinary practitioner or veterinary technician under Title 2, Subtitle 3 of the Agriculture Article

Maryland’s Health Professions Article requires licenses for a wide variety of health care professionals, including:

• audiologists, speech pathologists and music therapists;
• chiropractors;
• dentists;
• nutritionists-nutritionists;
• massage therapists;
• morticians and funeral directors;
• nurses;
• nursing home administrators;
• occupational therapists;
• optometrists;
• pharmacists;
• physiotherapists;
• physicians and physician assistants;
• pediatric doctors;
• professional counselors and therapists;
• psychologist;
• social worker;
• residential child care program professionals;
• environmental health specialists;
• acupuncturists.

The law also sets new, albeit less restrictive, parameters for covered employee earnings more than $350,000 a year. Specifically, the law states that a non-competition or conflict of interest provision agreement must:

• Not more than one year from the last day of employment;
• Not impose any geographic restrictions that exceed 10 miles from the principal place of work; OR
• Allow a patient to request and receive notification of the new location where the former employee will practice.

For covered health care professionals, HB 1388 takes effect on June 1, 2025.

Article of Agriculture (Veterinary).

Similarly, the Agriculture Article defines veterinary professionals as follows:

• “Veterinarian” means a licensed and registered veterinarian engaged in the practice of veterinary medicine. Md. Agriculture Code. § 2-301(13)(h)(i)
• “Veterinary technician” means the person who is registered with the Board as a veterinary technician. Md. Agriculture Code. § 2-301(13)(h)(ii)

For covered veterinary professionals, HB1388 takes effect earlierIN June 1, 2024.

Next steps for the Health Care Commission

Finally, HB 1388 requires the Maryland Health Care Commission to contract with a private consultant to study:

1. The effect of private equity firms on the health care market in the state;
2. Payer mix for physician practices and private equity ownership groups;
3. The impact of hospital consolidations on physician practices;
4. Acquisition of doctor’s practices; AND
5. Impact on the ability of not-for-profit hospitals and health systems to maintain access to care, including the ability to hire and retain physicians.

Main Agreement

With the passage of this new statute, healthcare and veterinary employers in Maryland may need to consider taking a second look at their non-compete agreements and adjust their use accordingly.

Ogletree Deakins’ Unfair Competition and Trade Secrets and Healthcare practice groups will continue to monitor developments and provide updates on the Unfair Competition and Trade Secrets and Healthcare blogs as additional information becomes available.