The District of Columbia is bracing for a transition. But while employers across the country wait to see what changes the Biden Administration may bring, Washington, D.C. employers should prepare for a drastic and imminent change in their own backyard.
As we previously reported, last month the District of Columbia Council passed the Ban on Non-Compete Agreements Amendment Act of 2020 (D.C. Act 23-563) (the “Act”). On January 11, 2021, Mayor Bowser signed the legislation. It will now be sent to Congress for the congressional review period set forth by the Home Rule Act. Absent Congress passing and the President signing a joint resolution of disapproval, which is unlikely to happen, the law will take effect after 30 legislative session days and publication in the D.C. Register, and apply upon inclusion of its fiscal affect in an approved budget and financial plan.
As a reminder, under the Act, all D.C. employers are prohibited from requiring or requesting that an employee sign any agreement containing a non-compete provision. Nor may they implement a workplace policy that prohibits an employee (1) being employed by another person, (2) performing work or services for pay for another person; or (3) operating their own business. The ban applies to most employees, with medical specialists who have completed a medical residency and earn at least $250,000 annually being one of the few exceptions. Notably, non-compete agreements entered into before the Act goes into effect will still be enforceable. The Act also includes a notice requirement and provides strong anti-retaliation protections for employees who refuse to agree or fail to comply with an unlawful non-compete provision or workplace policy. For further analysis and a detailed summary of the Act, please see our December 22, 2020 article.
While we will continue to monitor the Act throughout the congressional review period, D.C. employers who are considering entering into non-compete agreements with their applicants or employees should do so now so that they remain enforceable after the Act takes effect.
Please contact one of the authors or another EBG attorney for assistance with appropriate restrictive covenants under the circumstances. Assuming Congress does not intervene, the authors are planning a webinar to explain the Act and answer questions.