1. Non-Competition Agreements Prohibited for Low Wage Earners in Maryland

Maryland law prohibits employers from entering into non-competition agreements with low wage workers, defined as employees who earn $15 per hour (equivalent to $31,200 per year) or less, effective October 1, 2019. Any agreement between a low wage worker as defined in the new law and an employer is null and void as against public policy.  The prohibition for unenforceable agreements under the statute also includes a “conflict of interest provision,” although the statute does not define such a conflict of interest.  One assumes that such a conflict provision is intended to frustrate a low wage worker from employment with another employer or self-employment where the competing work is declared a conflict of interest.  However, with the lack of caselaw given the statute’s recent enactment, an interpretation is less clear.

The law does not affect employees’ non-competition agreements entered into before October 1, 2019 provided that the wage rate the employee receives after October 1, 2019 is more than $15 per hour.  The law contains an exemption that it “does not apply to an employment contract or a similar document or agreement with respect to the taking or use of a client list or other proprietary client-related information.”  Therefore, protections for trade secrets and confidential information as well as prohibitions against customer solicitation for low wage workers remain lawful.  Also, non-competition agreements for those employees earning above the $15 per hour wage threshold remain lawful.

2. Maryland Gender Diversity on Boards Law Effective October 1, 2019

In 2019, Maryland’s Governor signed bill HB1116/SB911, referred to as the “Gender Diversity on Boards” law requiring certain Maryland businesses and nonprofits to report the number of women on their boards as part of the Annual Report of Personal Property Tax Form-1 which companies and nonprofits must file annually by April 15 to Maryland’s Department of Assessments and Taxation.  The requirement to file the report includes nonprofit organizations with an operating budget exceeding $5 million annually and publicly traded companies with sales exceeding $5 million annually.  Privately held companies are subject to the filing requirement and only exempted if at least 75 percent of the shareholders are family members.  Each year the State Comptroller will issue a report on its website with the ratio of female board members.

3. D.C. Paid Family Leave Law Starts July 1, 2020

Under the Universal Paid Leave Amendment Act (“PFL” or “Act”), effective July 1, 2020, a covered employee is eligible for paid family and medical leave.  The regulations are here.  A “covered employee” means an employee who: (i) spends more than 50 percent of his/her work time for the employer working in Washington, D.C.; or (ii) or whose employment for the covered employer is based in Washington, D.C., who regularly spends a substantial amount of time working in Washington, D.C., and who does not spend more than 50 percent of his/her work time working for the employer in another jurisdiction. 

Under the PFL, paid leave benefits are available for family leave, medical leave or parental leave, further described below:

• Family leave: up to six workweeks of paid family leave per year to care for a family member because of the diagnosis or occurrence of a serious health condition. Family members include children, parents, spouses or domestic partners, grandparents, and siblings.
• Medical leave: up to two workweeks of paid leave within a year after the diagnosis or occurrence of the employee’s serious health condition.
• Parental leave: up to eight workweeks of paid leave within a year after (a) the birth of the employee’s child, (b) the placement of a child with the employee for adoption or foster care, or (c) the placement of a child with the employee for whom the employee assumes parental responsibility.

A serious health condition is defined as “a physical or mental illness, injury, or impairment that requires inpatient care in a hospital, hospice, or residential health care facility, or continuing treatment or supervision at home by a health care provider or other competent individual.”  The leave must be taken within 52 weeks of the qualifying leave event.

District of Columbia employers contribute an amount equal to 0.62 percent of employees’ wages to the Universal Paid Leave Implementation Fund, which pays out the benefits.  The rate of PFL benefits paid to employees is calculated based on an employee’s average earnings -- compared with the District of Columbia minimum wage – over time.  Until October 1, 2021, the maximum weekly wage benefit is $1,000.  Thereafter, the weekly cap increases annually with the rate of inflation.

Certain notice posting and record keeping obligations exist. Specifically, employers must post the PFL notice in their worksites along with other labor law posters by February 1, 2020.  In addition, this notice must be provided in electronic or physical form to:

1. All employees at least once between February 1, 2020 and February 1, 2021 and at least once a year every following year;
2. All new employees hired after February 1, 2020 at the time of hire; and
3. Individual employees when the employer receives direct notice after February 1, 2020 of the employee’s need for leave for an event that could qualify for PFL benefits.

PFL is not job-protected leave, but the Act prohibits retaliation against an employee who applies for or claims benefits.

4. Maryland Minimum Wage Increases to $11 Per Hour

Effective January 1, 2020, Maryland’s hourly minimum wage increased to $11 an hour from the $10.10 hourly minimum wage effective in 2019.  The minimum wage will increase each year through 2026 depending upon the number of employees of an employer. 

Nelson Mullins attorneys in the Labor and Employment Group are available to assist employers with these compliance and related matters including litigation.