Wilt Toikka Kraft LLP


Important Revisions and Recent Developments in Employment Contracts: Essential Insights for Maryland and Virginia Employers

Employers in Maryland and Virginia should stay informed about recent legislative changes affecting non-compete, confidentiality, non-disclosure, and non-disparagement provisions in pre-dispute agreements provided to employees at the commencement or during their employment. Maryland Employment Lawyers are instrumental in navigating these legal nuances. In Virginia, employers are now prohibited from mandating employees to enter into non-disclosure, confidentiality, and/or non-disparagement agreements related to claims of sexual harassment. Virginia’s House Bill 1895 amends an existing Virginia law that also covers sexual assault. Similarly, in Maryland, employers are restricted from imposing non-compete agreements on employees earning less than $41,350 in 2023 or $46,800 in 2024.

Employers in both states should review and revise their agreements with employees to align with these new laws, seeking guidance from Maryland Employment Lawyers for comprehensive compliance.

Non-Disclosure, Confidentiality, and Non-Disparagement Agreements in Virginia Must Carve Out Sexual Assault and Sexual Harassment Claims

Effective July 1, 2023, Virginia employers are prohibited from requiring employees to enter into confidentiality, non-disclosure, or non-disparagement agreements related to claims of sexual harassment, in addition to claims of sexual assault, which are already unlawful. Virginia is following the lead of other states, including New Jersey, New York, Washington, and California, as well as provisions under the recent federal Speak Out Act. The Speak Out Act prohibits the use of non-disclosure and non-disparagement agreements related to allegations of sexual assault and/or sexual harassment entered into “before the dispute arises.” Employers should note that the law applies exclusively to prospective and current employees, excluding independent contractors or other non-employment relationships.

The law applies to agreements entered into as a “condition of employment,” likely applying to non-disclosure, confidentiality, or non-disparagement agreements at the beginning of employment rather than to severance or other post-employment agreements. It remains unclear whether it applies to settlement agreements executed during an employee’s employment, provided the settlement agreement is a condition of continued employment.

The law does not expressly state its retroactivity, applying only to agreements entered into on or after July 1, 2023. Virginia employers should revise existing agreements required during an employee’s onboarding process or otherwise required as a condition of employment, explicitly excluding claims of sexual harassment and sexual assault from confidentiality, non-disclosure, and/or non-disparagement provisions, with guidance from

Maryland Employment Lawyers for comprehensive understanding. Maryland Employers May Not Impose Non-Compete Agreements on Low Wage Workers

Effective October 1, 2023, Maryland employers may not impose non-compete, conflict of interest, or similar agreements on employees earning $41,350 or less annually. Maryland is the latest jurisdiction to limit or prohibit the use of non-compete agreements, aligning with neighbors D.C. and Virginia. The law prohibits employers from requiring low-wage employees to enter into any agreement preventing them from obtaining employment with a new employer or becoming self-employed in the same or similar business or trade. Non-solicitation of client lists and other client information is expressly exempted under the law, allowing unrestricted use of such agreements.

The salary threshold for Maryland employees subject to a non-compete, conflict of interest, or similar agreement has increased under Senate Bill 591 to 150 percent of the state minimum wage. As of October 1, 2023, the new threshold is $19.88 per hour (150% of the minimum wage of $13.25 per hour) or approximately $41,350 annually. This marks an increase from the previous threshold of $15 per hour or approximately $31,200 annually. The threshold will automatically rise with increases in the minimum wage, including the upcoming year.

Maryland recently enacted the Fair Wage Act of 2023, raising the minimum wage from $13.25 to $15 per hour, effective January 1, 2024. Consequently, the minimum wage increase will elevate the salary threshold for the non-compete law from $19.88 to $22.50 per hour or approximately $46,800 annually. Although based on the minimum hourly wage, the threshold applies to exempt salaried employees paid less than the specified amount ($41,350 in 2023 and $46,800 in 2024).

Maryland employers should anticipate the rise in the state’s minimum wage and the resulting increase in the non-compete threshold beginning in 2024, seeking guidance from Maryland Employment Lawyers for comprehensive compliance.

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