Almost 2 years after the Ban on Non-Compete Agreements Amendment Act (“the Act”) was passed, the Act – with significant amendments – will become effective and applicable to all employers with D.C. employees on October 1, 2022. The law generally prohibits employers from entering into or imposing non-compete agreements and policies on D.C. employees that restrict their outside work activities both during and post-employment, subject to certain exemptions. Details regarding the Act are available here.
To prepare, covered employers should consider taking the following actions, after consulting with counsel:
- Determine which employees are covered by the Act. Only employees who work a certain amount of their time for the employer in D.C., and are not otherwise excluded, are covered.
- If you plan to utilize non-competition agreements after October 1, 2022, determine which covered employees may be subject to such agreements under the Act (e.g., “highly compensated” employees) and ensure such agreements meet the new requirements of the Act – including its notice provision.
- Examine the exemptions to the non-compete ban – like the exemption for long term incentive programs (such as those providing bonuses, equity compensation, stock options, and other performance driven incentives “typically earned over more than one year”) – and consider whether to utilize them to secure simultaneous or post-employment competition restrictions.
- Review any policies that ban moonlighting or simultaneous employment and determine whether they meet the various other exemptions to the Act’s prohibitions (e.g., conflict of interest policies) and provide sufficient protection.
- Provide notice of any policies restricting employees’ simultaneous employment efforts to covered employees within 30 days of an employee’s acceptance of employment; by October 31, 2022; and each time the policy changes.
We will continue to monitor and provide updates regarding the Act.