Business

by Samantha Chan

New Prince George’s County Business Fees

Prince George’s County recently enacted CB-017-2026, a law establishing new use and occupancy permit fees for certain categories of businesses. As this law moves into implementation, affected business owners should understand how it may impact their operations and planning.

What Is a Use and Occupancy Permit?

A use and occupancy (U&O) permit is issued by the County to confirm that a business location complies with zoning, safety, and code requirements and is authorized to operate.

Most businesses already need this permit, particularly when opening a new business, changing tenants or ownership, and/or changing the use of a property. CB-017-2026 builds on that existing framework by adding new fees for certain types of businesses.

What Does CB-017-2026 Do?

The law establishes specific use and occupancy permit fees for certain business categories, such as annual or renewal fees tied to those permits. According to the Act, the purpose of this bill and renewal fees is to establish a non-lapsing “Quality of Life Improvement Fund.”

In practice, the legislation imposes a $5,000 annual fee on certain businesses, including:

• Liquor stores
• Tobacco shops
• Firearms dealers
• Self-storage facilities

If your business falls within one of these categories, you will need to budget for this recurring fee, and your current use and occupancy permit may include additional requirements or renewal conditions

Practical Implications for Business Owners

1. Increased Operating Costs

A $5,000 annual fee is a meaningful expense, particularly for small or independently owned businesses. Owners should take time to evaluate how this added cost affects their margins, pricing structure, and overall sustainability. Factoring this fee into long-term business planning is now essential, especially for businesses operating in already competitive markets.

2. Compliance Matters More Than Ever

Because this fee is tied to a regulatory permit, compliance becomes even more important. Business owners should ensure that their use and occupancy permit remains current and accurately reflects how the business is operating. Any changes in ownership, structure, or use of the property should be properly documented and reported to the County to avoid complications or potential enforcement issues.

3. Impact on Buying or Selling a Business

This change also has implications for transactions. If you are purchasing a business or buying into an existing operation, it is important to confirm whether the business is subject to the new fee and whether its use and occupancy permit is in good standing. Any outstanding compliance issues should be identified early. What may have previously been a routine regulatory check is now a meaningful part of due diligence that can affect the overall value and viability of the business.

Final Thoughts

CB-017-2026 is now part of the regulatory landscape in Prince George’s County. For affected businesses, the focus should be on understanding the requirements, maintaining compliance, and planning for the added cost.

by Lisa White

A Maryland Employer’s Guide to Sick Leave Policies

Employers in Maryland must work within the confines of both state and federal laws when implementing sick and safe leave policies for their employees. The Maryland Healthy Working Families Act imposes specific requirements that employers must comply with regarding the accrual and usage of leave. Employers need a sick leave policy that meets the statutory requirements and meets the needs of their operations.

An employer’s legal obligation to provide sick leave to its employees depends on the number of employees at the company. If there are 15 or more employees, the employer must provide paid sick and safe leave. If 14 or fewer employees, the employer must at least provide unpaid sick and safe leave.

Certain categories of workers may be excluded from the requirement of providing leave. An employer should consult with an attorney to assess whether leave, and what type of leave, must be provided to its workers or employees.

How is Sick and Safe Leave Earned?

Employers have two choices in determining how their covered employees earn sick and safe leave. An employer may opt to allow employees to earn leave incrementally over time based on hours worked at a rate of one hour of leave for every 30 hours worked. Alternatively, an employer may choose to front-load the full amount of annual leave, which is 40 hours, at the beginning of the year. Employers may choose to require that employees wait up to 106 calendar days after beginning employment before using accrued leave.

In Maryland, unused leave must be carried over from year to year. Employees may carry over up to 40 hours of unused leave. Employers are allowed to limit the amount of leave any one employee accrues to 64 hours at any time.

For What Purposes Can an Employee Take Sick and Safe Leave?

Employees may use sick and safe leave for the following reasons:

• The employee’s own illness, injury, or medical condition
• Preventive care, such as doctor’s appointments
• Caring for a family member with a medical condition
• Medical or physiological care
• Leave to address situations involving domestic violence, sexual assault, or stalking

This list is not exhaustive. Employers should ensure that their company policies reflect all permissible uses for sick and safe leave allowed by law.

Maryland employers must comply with recordkeeping requirements and consider other federal laws that may apply to their business. Whether you are a business in need of establishing an appropriate sick and safe leave policy for your business or an employee with concerns about your company’s implementation of its sick and safe leave policy, Lewicky, O’Connor, Hunt & Meiser stands ready to assist you.

None of the information provided in this article constitutes legal advice. Every situation is different and should be thoroughly reviewed by and discussed with your legal advisors. Please do not rely on the contents of this article as a basis for making decisions regarding your situation. Please call us to schedule a consultation at (410) 489-1996.

by Elizabeth Bowery

A Consumer’s Right to Cancel Some Types of Contracts in Maryland

Maryland businesses that sell directly to consumers – particularly in homes or at temporary locations – need to be aware that certain transactions carry mandatory cancellation rights. It is important to follow these consumer protection requirements in written contracts and in company sales practices.

Federal Trade Commission Cooling-Off Rule

The Federal Trade Commission’s (FTC) Cooling-Off Rule applies to some consumer sales made outside of the seller’s regular place of business. The rule generally applies to consumer transactions of $25 or more that occur at a consumer’s home or a temporary location such as a hotel or convention booth. When the rule applies, the consumer has the right to cancel the transaction within three business days after signing the contract. To comply, a business must take specific steps to properly disclose the consumer’s right to cancel and incorporate that right into its contracts.

Maryland Cancellation Requirements

Maryland law provides additional consumer protections under the Maryland Consumer Protection Act and industry-specific statutes. Some industries are subject to heightened requirements, such as home improvement contracts and door-to-door sales. Other regulated industries include health club memberships, timeshare sales, and credit service organizations. Maryland laws and regulations governing these industries can impose detailed requirements for cancellation rights.

Common Compliance Issues

Businesses most often encounter problems when they use generic contract templates, fail to provide adequate notice, include cancellation provisions that are incomplete or inconsistent with the law, or overlook Maryland-specific requirements that operate alongside and in addition to federal rules. Failure to comply may render the contract unenforceable and may expose the business to regulatory enforcement. Federal and state regulators, including the FTC and the Maryland Attorney General, may investigate violations, impose penalties, and take legal action.

Consult a Business Lawyer

Consider consulting with a business attorney to ensure compliance with cancellation requirements. As business attorneys, we assist business owners at every stage of ownership, offering guidance in selecting the best entity, drafting customized governing documents, and providing ongoing business counsel.

by Samantha Chan

Management Agreements During Business Acquisitions

When a business is being acquired, there is often a time period between signing the deal and closing the transaction. During this interim period, buyers and sellers sometimes make arrangements for the buyer to gradually begin taking over some aspects of the day-to-day operations. This type of informal arrangement is especially common in the acquisition of a small business. This kind of information arrangement can easily result in liability issues and disputes between the parties, however, and often is a very bad idea.

Until an acquisition transaction closes, the anticipated seller still owns the business. The selling party remains legally responsible for operations, employees, contracts, and any potential liabilities – and this remains true even if the anticipated buyer has informally started to step into a management role. The desire for a smooth transition can sometimes be accommodated, while reducing the risks of an information arrangement, by putting in place a well-drafted Management Agreement that clearly defines each party’s rights and obligations.

The specific provisions to be included in your Management Agreement will vary depending on the nature of the business and the structure of the transaction – but here are some starting points to guide that discussion.

1. Decision-Making Control and Decision-Making

In small businesses, such as family-run restaurants, liquor stores, and medical practices, the line between ownership and operations is often blurred during this interim period.

A well-drafted Management Agreement should clearly define:

• Who is responsible for daily operations;
• What decisions the buyer can make independently; and
• What decisions still require seller approval.

Even if the buyer is stepping in to “run the business,” the seller will still want (and likely need) to retain final say on major issues until closing of the transaction is completed.

2. Seller Transition Role and Compensation

In many small business transactions, the seller is not just exiting the business, but may be actively training the buyer on the day-to-day operations.

A well-drafted Management Agreement should document:

• Whether and to what extent the seller will remain involved during the transition;
• The scope of training or consulting (e.g., vendor relationships, licensing, patient/customer management);
• Whether the seller will be compensated (salary, consulting fee, or management fee); and
• The expected time commitment.

Without clear terms, disputes often arise over whether the seller is “helping out” or is entitled to compensation for their continued involvement.

3. Revenue, Expenses, and Inventory

During the interim period, the buyer may spend significant time operating the business, and in some cases, may even improve business performance before closing.

The strong Management Agreement should address:

• Who is entitled to the business’s income during the interim period (typically the seller);
• Who is responsible for operating expenses;
• Who is responsible for purchasing and maintaining inventory; and
• How cash flow is to be handled.

These provisions should be explicit to avoid any dispute between the parties.

4. Duration and Termination

Not all transitions are the same. Some businesses require a longer ramp-up period, particularly where licensing, relationships, or specialized knowledge are involved. To manage expectations for both parties, the Management Agreement should consider:

• When the agreement begins (typically upon signing) and when it ends (typically at closing);

• Whether compensation terms should reflect any extended involvement; and
• What happens if the transaction does not close, including unwinding operational control and payment for services rendered.

Most parties enter into a business sale with good intentions – but during a pre-closing transition period, even well-intentioned arrangements can go sideways. The bottom line is that ownership has not yet transferred before closing, but day-to-day control has already begun to shift. A well-drafted Management Agreement helps bridge that gap. It protects both parties, ensures that everyone is aligned on roles and expectations, and helps the parties address potential issues before they arise, including what happens if the deal does not conclude as planned.

If you are in the process of acquiring or selling a business, the experienced business law attorneys at Lewicky, O’Connor, Hunt & Meiser are available to guide you through each step of the transaction—from initial structuring through closing and transition.

by Lisa White

Are Non-Compete Agreements Enforceable in Maryland?

People searching for a new job often discover that an offer of employment comes with a request – or requirement – to sign a non-compete agreement with the new employer.  Sometimes these agreements are signed without the job seeker giving full consideration to the implications of signing.

To be enforceable in Maryland, a non-compete agreement must be reasonable in scope, geography, and duration. The agreement must protect a legitimate business interest of the company, and cannot cause undue hardship on the employee’s right to earn a living. Maryland law prohibits non-compete agreements for employees earning less than 150% of the state minimum wage, or when the non-compete agreement would prevent the employee from entering into employment with a new employer or becoming self-employed in the same or similar business or trade as a matter of public policy. Currently, 150% of the state minimum wage is $22.50 per hour ($46,800.00 per year).

For certain health care providers (those providing direct patient care and earning less than $350,000.00 annually), a non-compete agreement may have a duration of no longer than one year from the last day of employment. Such non-compete agreements may not contain a geographical restriction of more than ten miles from the primary place of employment.

Maryland courts evaluate whether a non-compete agreement is reasonable in scope, geography, and duration, and also determine whether the agreement protects a legitimate business interest of the company, imposes undue hardship, and whether the agreement harms the public. A reasonable non-compete agreement must be narrowly tailored to protect the employer’s business interest. It cannot pose an undue hardship on the former employee. Geographically, the limitation must not be any wider than necessary for the protection of the employer’s business.

How Should Your Business Tailor Its Non-Compete in Maryland?

First, an employer must determine the scope of its business and what it seeks to protect with the non-compete agreement. Next, an employer must determine its geographical scope within which it conducts business. Contacting a business attorney can assist an employer with drafting an enforceable agreement that can be tailored to specific employees to meet the legal requirements for enforceability.

What Employees Should Do Before Signing or Violating a Non-Compete?

When an employee is presented with any type of non-compete, whether as part of an initial hiring or during the course of employment, the employee should not assume it is enforceable – but it might be. The employee should read the entire document and consult with an attorney to learn about the risks to the employee should the employee choose to sign the document. These agreements can contain penalties for violation of the non-compete, including an injunction and payment of attorney’s fees to the employer should a breach of the agreement occur.

Lewicky, O’Connor, Hunt & Meiser stands ready to review proposed non-compete agreements, whether you are a business or an employee seeking advice. None of the information provided in this article constitutes legal advice. Every situation is different and should be thoroughly reviewed by and discussed with your legal advisors. Please do not rely on the contents of this article as a basis for making decisions regarding your particular situation. Please call us to schedule a consultation at (410) 489-1996.

by Elizabeth Bowery

Does Forming an LLC Protect Members from Personal Liability?

Business founders often form a Limited Liability Company (LLC), expecting the LLC structure to shield them from personal liability for the company’s debts and obligations. While Maryland law does provide meaningful liability protection for an LLC member, it does not categorically prevent the member from being held liable in an individual capacity.

Under Maryland law, an LLC member generally is not personally liable for the obligations of the company solely because they are a member. In most circumstances, creditors seeking to collect a business debt must look to the LLC’s assets, not the member’s personal assets. That protection, however, is limited to liability arising from ownership status alone and does not extend to liability based on an individual’s own conduct or independent legal obligations.

As a result, an LLC member may still face personal liability in several situations, such as:

• Signing a personal guarantee of company debt
• Liability imposed directly by statute
• The member’s own tortious conduct (for example, fraud).

The LLC’s liability shield is strongest when the company is operated as a separate legal entity serving a legitimate business purpose. Maryland courts generally pierce the LLC veil only to prevent fraud or enforce a paramount equity. In evaluating whether that standard is met, courts may consider factors such as the LLC member treating the LLC as an extension of personal finances or using the LLC to facilitate unlawful conduct. These practices can undermine the liability framework and weaken the argument that the LLC should shield the LLC member from personal exposure.

Understanding the scope and limits of LLC liability protection is a critical aspect of building and protecting a business. As business lawyers, we assist business owners at every stage of ownership, offering guidance in selecting the best entity, drafting customized governing documents, and providing ongoing business counsel.

by Samantha Chan

Starting a New Business in Maryland

The beginning of a new year is a popular time to launch a business. Whether you’re expanding on an existing idea or starting from scratch, the early planning stages involve many exciting decisions. But it’s important not to overlook the legal groundwork of starting a new business. A solid legal foundation can save you significant time, money, and stress if issues arise later. As you map out your next steps, here are key considerations:

1. Choose the Right Business Structure

Maryland offers several options, each with different liability and tax implications:

• LLCs – The most common for small and mid-size businesses. Popular because it may shield individuals from personal liability.
• Corporations – Better for companies seeking investors or issuing stock.
• Sole Proprietorships/Partnerships – Easy to set up, but offers little to no personal liability protection.

Filing with the Maryland Department of Assessments and Taxation (SDAT) is only the first step when starting your new business. The structure you choose affects ownership rights, management, and how disputes will be handled later on.

2. Don’t Skip the Operating Agreement

An LLC without a written operating agreement is vulnerable. Maryland law recognizes these agreements, and courts rely heavily on them during disputes.

Your LLC operating agreement should clarify:

• Ownership percentages
• Voting and decision-making
• Profit distribution
• Buy-out provisions
• What happens if owners disagree or someone leaves

Many lawsuits arise from businesses formed with handshake agreements or online templates. A tailored operating agreement may significantly reduce that risk. If your company is structured as a corporation, then it is required to have written bylaws.

3. Use Clear, Written Contracts

Every business relationship should be documented: vendors, contractors, employees, and partners. Written contracts protect expectations and reduce misunderstandings.

Important terms include:

• Payment and deadlines
• Scope of work
• Termination rights
• Venue and dispute-resolution language
• Intellectual property and confidentiality

Even simple agreements help prevent disputes and protect your rights if one occurs.

4. Keep Good Records From Day One

New businesses often overlook evidence preservation, but maintaining good records can help resolve problems if a dispute arises later.

Build good habits early:

• Use accounting software
• Keep receipts, emails, and contracts organized
• Store digital records securely
• Have a document-retention policy

Strong record-keeping makes your business more efficient and better protected.

Whether you are just starting to form your business or are already in the thick of running it, Lewicky, O’Connor, Hunt, and Meiser has a team of experienced business attorneys who can assist you both in preventing problems before they arise and in navigating issues when they do. Schedule your consultation today for help keeping you and your business on track.

Disclaimer: Any questions regarding tax obligations, consequences, or planning should be directed to a qualified tax attorney, accountant, or other licensed tax professional. This article does not provide detailed or comprehensive information about taxation matters.

by Elizabeth Bowery

Beware of Business Opportunity Schemes: What Maryland Business Owners Need to Know

When setting out on a business venture, new business owners can be vulnerable to fraudulent schemes. One prevalent scheme involves the sale of a “business opportunity.” Scammers employ deceptive advertising and high-pressure sales tactics to peddle ostensibly low-risk, lucrative business opportunities and swindle their victims.

Under Maryland law, a “business opportunity” is defined as an arrangement between a seller and a buyer. In this arrangement, the seller solicits a prospective buyer to purchase products, equipment, supplies, or services to enable the prospective buyer to start a business. The prospective buyer is required to make a payment, and the seller represents, directly or indirectly, that it will help the prospective buyer make the business successful. For example, the seller may claim it will help the prospective buyer secure accounts or a prime location. Unfortunately, some of these offerings are fraudulent.

How the State of Maryland Has Taken Action

To combat this, the State of Maryland enacted a law to regulate the sale of business opportunities and fight against these deceptive practices. The Maryland Business Opportunity Sales Act sets forth several requirements for the seller of a business opportunity, including:

• registering the business opportunity with the state,
• providing the prospective buyer with a written disclosure statement at least ten business days before the prospective buyer executes a contract, and
• in some cases, such as when income is guaranteed, posting a surety bond with the state.

The Federal Trade Commission, the federal consumer protection agency, also addresses this issue with its Business Opportunity Rule. As a result, sellers of business opportunities operating in Maryland must comply with both state and federal requirements.

Protect Yourself From Fraudulent Business Opportunities

Despite these measures, sellers of fraudulent business opportunities continue to target unsuspecting, first-time business owners. Before committing to a business opportunity, consider consulting with a business attorney to review the disclosure statement and the sales contract to ensure compliance with state and federal standards. As business attorneys, we assist business owners at every stage of ownership, offering guidance in selecting the best entity, drafting customized governing documents, and providing ongoing business counsel.