Operating a business in Maryland means navigating a legal landscape with its own contours—shaped by Maryland appellate decisions and state-specific statutes that often diverge from national templates. This article flags eleven high-impact areas where choices in a company’s contracts, policies, and day-to-day operations can materially shift risk: entity separateness and personal liability, restrictive covenants and wage/commission traps, arbitration and forum/choice-of-law drafting, worker classification and fiduciary duties, trade-secret protection, construction risk allocation, and consumer protection. The goal of this article is not to exhaust the law but to provide an overview of some controlling Maryland authority that can assist businesses.
Imporantly, as outcomes hinge on facts and fast-moving statutes, treat the content of this article as general information—not legal advice—and consult a Maryland business attorney to tailor strategies to your industry and risk profile.
1) Corporate form is not always an automatic shield: veil-piercing & personal liability
Maryland has a strong presumption against piercing the corporate veil; a plaintiff typically must establish fraud or similar exceptional circumstances. (Bart Arconti & Sons, Inc. v. Ames-Ennis, Inc., 275 Md. 295 (1975)). Even where the entity stands, individual actors remain liable for their own torts. The Supreme Court of Maryland has held that an LLC member can be personally liable for his own negligence notwithstanding the LLC. (Allen v. Dackman, 413 Md. 132 (2010)). Businesses should rigorously maintain and thoroughly document the separation between the individual and the corporation (capitalization, minutes, no commingling) and contemporaneous documentation of intercompany transactions; undercapitalization alone rarely wins a veil-piercing claim. Maryland businesses should also maintain director & officer (D&O) / management liability insurance and written indemnification agreements as a backstop to personal-liability exposure for individual decision-makers.
2) Restrictive covenants: reasonableness, tailoring, and low-wage limits
Maryland courts enforce non-competes and non-solicits only if narrowly tailored to protect legitimate interests (e.g., trade secrets, customer goodwill) and reasonable in scope/duration. (Ruhl v. F.A. Bartlett Tree Expert Co., 245 Md. 118 (1967) and Holloway v. Faw, Casson & Co., 78 Md. App. 205 (1989)). In Maryland, non-competes are void for “low-wage” workers—currently, workers making at or less than $19.88/hour or $41,350 annually. (Md. Lab. & Emp. § 3-716 (as amended)). That said, in Maryland, trade-secret/customer-list overlaps still matter. (Optic Graphics, Inc. v. Agee, 87 Md. App. 770 (1991) and Padco Advisors, Inc. v. Omdahl, 179 Md. App. 412 (2008)). Maryland businesses should draft to protect specific interests (named clients, regions actually served, concrete confidential categories) and pair covenants with consideration at key moments (hire, promotion, bonus).
3) Arbitration clauses: mutuality and unconscionability checks
In Maryland. an arbitration clause must be an actual contract, not an illusory promise the drafter can change at will. (Cheek v. United Healthcare of the Mid-Atlantic, Inc., 378 Md. 139 (2003)). Even when the Federal Arbitration Act applies, Maryland’s mutual-consideration rule for arbitration provisions survives; a one-sided arbitration clause may fail. (Noohi v. Toll Bros., Inc., 708 F.3d 599 (4th Cir. 2013)). Courts also consistently rule that a contract by adhesion does not automatically void an arbitration clause. Businesses should use a true bilateral promise to arbitrate, specify governing arbitral rules, and address fees so the process isn’t prohibitively expensive for either side. Business should consider a small-claims carve-out and a clear delegation clause—while also ensuring that delegation itself is not one-sided or illusory.
4) Forum-selection and choice-of-law clauses
Maryland has adopted the Supreme Court’s “M/S Bremen v. Zapata Off-Shore Co.” Reasonableness Framework and generally enforces mandatory forum-selection clauses. (Gilman v. Wheat, First Secs., Inc., 345 Md. 361 (1997)). Choice-of-law is likewise respected unless it lacks a substantial relationship or violates a strong Maryland public policy. (Am. Motorists Ins. Co. v. ARTRA Grp., Inc., 338 Md. 560 (1995)). In one example, Maryland Courts refused to apply a clause that waived a subcontractor’s statutory mechanics’ lien right. (National Glass, Inc. v. J.C. Penney Props., Inc., 336 Md. 606 (1994)). Maryland businesses should aim to (1) tie the chosen forum or law to a real nexus (company HQ, performance location, negotiation site) to discourage “unreasonable or unjust” challenges and (2) carve out claims that implicate nonwaivable Maryland policy (e.g., lien rights, certain employment statutes) so the clause is more likely to stand.
5) Wages, commissions, and treble damages exposure
Under the Maryland Wage Payment and Collection Law (“MWPCL”), courts have discretion (not a presumption) to award up to treble damages, plus fees, for unlawfully withheld wages. (Peters v. Early Healthcare Giver, Inc., 439 Md. 646 (2014); Admiral Mortgage, Inc. v. Cooper, 357 Md. 533 (2000)). A Maryland employer that delays paying earned commissions after termination risks liability. (Higgins v. Food Lion, Inc., 197 F. Supp. 2d 364 (D. Md. 2002)). Maryland businesses should define “when earned” with precision—conditions precedent, splits, charge-backs, and timing—so commissions don’t become disputed “wages” after separation. Companies should also build a post-termination payment schedule into the plan and train managers not to delay payout while “awaiting approvals.”
6) Employee vs. contractor: control still rules
Under Maryland law, misclassification risk—payroll taxes, wage claims, workers’ comp—turns on right-to-control factors. (Imbraguglio v. Great Atl. & Pac. Tea Co., 346 Md. 573 (1997); Whitehead v. Safway Steel Prods., 304 Md. 67 (1985)). Maryland businesses should align the facts with the paper—supervision, equipment, schedule, and integration should match the contractor label or you’re inviting reclassification. Companies should keep a central matrix of roles and their tests across wage law, unemployment, workers’ comp, and tax so one fix doesn’t create a problem elsewhere.
7) Fiduciary duties inside LLCs and corporations
For LLCs, one Maryland case (Plank v. Cherneski, 469 Md. 548 (2020)), details managers’ fiduciary duties under Maryland’s LLC Act and the role of operating agreements. Under Maryland law, corporate fiduciary duties and internal-affairs conflicts are treated via standard doctrines. Operating agreements can refine (but not erase) core loyalty/care duties; and businesses can use them to set conflict-clearing processes, information rights, and standards of review. Maryland corporations should consider director/officer exculpation where permitted, but remember, it never covers bad faith or self-dealing.
8) Trade secrets & unfair competition: MUTSA + common law
Maryland courts protect bona fide trade secrets and permit tailored restraints to protect customer goodwill, most notably through that Maryland Uniform Trade Secrets Act. (Systems 4, Inc. v. Landis & Gyr Powers, Inc., 90 Md. App. 188 (1992)). For companies, “reasonable measures” are one’s evidentiary lifeline—access controls, labeled documents, need-to-know sharing, exit interviews, and quick credential shutdowns. When misappropriation is suspected, companies should move fast for injunctive relief and preserve devices for forensics before data is overwritten.
9) Construction/real-estate contracts: anti-indemnity limits & liquidated damages
Maryland courts will void clauses requiring a contractor/sub to indemnify (or defend) an owner for the owner’s sole negligence in construction-related agreements. (Maryland Code, Courts and Judicial Pro. § 5-401; Heat & Power Corp. v. Air Products & Chemicals, Inc., 320 Md. 584 (1990)). Under Maryland law, liquidated damages are enforceable if a reasonable forecast of likely loss; where valid, the nonbreaching party has no duty to mitigate. (Barrie School v. Patch, 401 Md. 497 (2007)). Construction and real-estate businesses should nail down change-order mechanics (who, how, and when) and keep contemporaneous notice for delays—courts look for compliance with contractual procedures. Importantly, construction and real-estate companies cannot forget the specific Maryland mechanics’ lien timing and preliminary notice steps; missed deadlines can erase powerful leverage!
10) Maryland Consumer Protection Act
Private Maryland Consumer Protection Act (“MCPA”) damages claims generally require actual reliance on a material misrepresentation. (Lloyd v. General Motors Corp., 397 Md. 108 (2007)). The Attorney General/CPD can enforce broadly (see Luskin’s). Business to business (“B2B”) disputes often fall outside the act unless the business is acting as a consumer. Companies should train marketing on “net impression” and substantiation—disclaimers won’t cure a headline that misleads a reasonable consumer. Businesses should also keep records of claims support (testing, surveys, specs) and be ready for AG inquiries, which can seek broad injunctive relief and penalties.
11) Tortious interference & unfair competition torts
To prove interference with economic relations and interference with contractual relations, Maryland requires improper or wrongful conduct beyond mere competition. (Alexander & Alexander Inc. v. B. Dixon Evander & Assocs., Inc., 336 Md. 635 (1994); K&K Management, Inc. v. Lee, 316 Md. 137 (1989)). Under Maryland law, at-will relationships are protectable, but you still need “improper means” beyond hard competition—think deception, intimidation, or misuse of confidential information. Businesses should document competitive justifications and avoid inducements that require the other side to breach clear contractual duties.
Adam Van Grack and the other business litigation attorneys at Longman & Van Grack have represented many parties all types of business advice, business disputes, trade disputes, interference matters, and contract disputes in Maryland and Washington, DC. Call (301) 291-5027 to speak with Mr. Van Grack or one of our other contract attorneys at Longman & Van Grack’s Bethesda, Maryland; Rockville, Maryland; or Washington, DC offices.