{3 minutes to read} If you're a business owner, you have probably heard about the state of the law on non-competes – non-compete clauses in employment agreements, or non-compete agreements that are documents in and of themselves.

So, what do I mean by the state of the law on non-competes?

Before 2024, every state had its own set of laws and regulations. Non-compete agreements or clauses in employment agreements were generally interpreted and/or governed by either a state statute or case law that would interpret clauses and how they should be adopted and applied to individual situations.

In early 2024 the Federal Trade Commission (FTC), which is a federal agency, promulgated a rule banning most non-compete clauses and non-compete agreements. There were some exceptions, but essentially it was a ban. At that point, employers were scrambling to figure out what they could do and what they had to do with the existing agreements and future agreements where they felt that they wanted to include a non-compete clause. They weren't scrambling for too long however because a few months later, a federal district court struck down that law and made it unlawful for the FTC to enforce it.

So, where are we now? Well, we're back to where we were before 2024, which is that in order to determine whether a non-compete clause or a non-compete agreement is allowed in your state, you have to look at state law. This could be state law where the employer lives or works, or where the business is located. In either situation, it is very important to get some solid advice as to whether these types of agreements are lawful or not. And if lawful, whether there are limits on those agreements. What could happen is that you end up using such an agreement or having a clause in an agreement that would ultimately be found to be completely invalid — something you don't really want.

If you have questions about whether a non-compete agreement that your business is using is lawful, contact a lawyer. If you're in Maryland, please contact us. You can also get a link to our YouTube channel, which has a lot of other short videos with tips for business owners.