U.S. - Maryland
2020.02.27 Forfeitures for Competition: What Would Maryland Do? The 4th Circuit has issued a split-decision in Allegis vs. Jordan, with Maryland law being examined in detail with respect to the circumstances under which post-employment plan benefits may be forfeited and clawed-back when executives breach their non-competition and non-solicitation covenants. The dissent favored the executives, based on a long-standing Maryland Court of Appeals decision: Food Fair Stores v. Greeley (1972). The majority found Greeley to be distinguishable. As a result, Allegis succeeded not only in being released from making any further plan payments to the executives, but also in recouping the payments previously made to them.
In particular, the court explained that the disputed benefits "more closely resembled consideration for post-employment services [indirectly through obedience to the covenants] provided to Allegis than a coercive deferred benefit" from services while actively employed. The court found it significant that the executives --
Because the Allegis decision involves having a federal court draw nuances when interpreting Maryland law, it is not clear how a Maryland court would rule. There are, however, two main lessons from the decision. First, courts generally favor employers when they seek to enforce clearly written forfeiture-for-competition provisions, especially when executive-level employees have specifically agreed to the controlling terms and conditions. Second, employers should be careful --
2019.10.01 New State Law Effective - prohibits employers from requiring low-wage employees to enter into noncompete agreements. Maryland Senate Bill 328 protects employees who earn less than $15.00 per hour or $31,200 per year from being required to enter into agreements that restrict their ability to work with a new employer in the same or similar business.
2018.04.24 Overly-broad Covenants not enforced (Neitzey v. Allen, Montgomery County MD) - see discussion here.
2014.Jun.10 Allegis Group v. Jordan: A Maryland district court enforced non-competition and non-solicitation provisions supported by incentive awards. The former employee collected $1.45 million, which appears to be at risk.
2013.July TEKsystems, Inc. v. Lajiness, 2013 WL 3389062: the Northern District of Illinois applied Maryland law per a contractual choice of law provision, and upheld a 50 mile/18 month restrictive covenant in a recruiter’s employment contract.
2011.03.16 Maryland Law on Blue Pencil, Etc. Delaware Elevator v. Williams (3/16/2011, Del.Ch. applying MD law), holding as follows:
TEKsystems, Inc. v. Bolton (Maryland U.S.D.C.) (2/4/2010, opinion by J. Bennett) --
Quoting from TEKsystems above. pages 7-8:
2007 Ecology Services - invalid re low level employees.
Copyright © Joseph Poerio. All rights reserved.