A former marketing executive at Ford Motor Company is currently facing civil litigation after accepting a position as president of a major Toyota distributor. Ford initiated the lawsuit against its former employee, Martin Collins, to prevent him from continuing his new position at Toyota, claiming a violation of its non-compete agreement with him.

In addition to removing Collins from the position, Ford is also seeking to collect $25,000 in damages and to recover a $900,000 signing bonus that it paid him when he was hired last spring. Attorneys for Collins contend that his new role does not involve activities that compete with Ford and therefore does not constitute a breach of the agreement.

Non-Compete Agreements in Maryland

Employers often ask employees to sign non-compete agreements as a way of protecting the investment they put into training new hires and to safeguard the trade secrets or confidential information revealed in the course of employment.

The laws governing non-compete agreements vary from state to state, so an agreement that is valid in one state may be unenforceable in another. While Maryland courts tend to be relatively accepting of non-compete agreements, there are limits on how they may be used.

Limitations on Enforceability

The most important limitation on non-compete agreements in Maryland, as elsewhere, is that they must be reasonable. Courts generally favor an individual's right to choose how to make a living and therefore will not enforce an agreement that imposes arbitrary or unnecessary burdens on a person's future employment options.

In practical terms, a "reasonable" non-compete agreement is one that is no more restrictive than necessary in terms of:

• The duration of the agreement after employment with the company ends
• The geographic scope of the restriction
• The types of businesses or activities prohibited

If a non-compete agreement puts more limits on an employee than necessary to protect the company's legitimate business interests, the court may invalidate the entire agreement or modify it to incorporate more reasonable terms. If you have questions about the enforceability of a non-compete agreement, contact an attorney with experience in business litigation and employment law.