The “Non-Compete Clarification Amendment Act” went into effect for employees in Washington, D.C. on October 1, 2022. Although this law is a narrower version of a much more expansive law passed back in early 2021, it provides many protections for employees against overbroad and restrictive non-compete agreements.
Non-compete clauses, generally contained in onboarding employment agreements or severance agreements, impede an employee’s job mobility as well as opportunities for higher pay and promotion by limiting where they can work once they leave a company. Many non-competes also have anti “moonlighting” clauses, which prevent employees from seeking employment with multiple employers at the same time, often restricting part-time employees from being able to make ends meet by working multiple similar jobs at once. The new law protects most full-time employees in the District who make less than $150,000 by prohibiting their employers from imposing any non-compete provision in their employment contracts.
For employees who earn more than $150,000 per year, and medical specialists earning more than $250,000, an employer is permitted to require a non-compete clause, but with some limits. For these employees, any non-compete agreement must specify the functional scope of any competitive restrictions (such as any off-limits service, role, industry or competing entity) and the geographic scope of any work restriction. Also, any non-compete agreement cannot exceed 365 calendar days (or 730 days for medical specialists). Moreover, the law requires that an employer must give employees any non-compete in writing and allow them 14 days to sign it, regardless of whether they are already employed by the employer. The law also prohibits retaliation against any employee who asks for more information regarding or objects to any non-compete they are requested to sign.
The new law applies only to employees who spend more than half of their working time physically working in the District for an employer based anywhere. As a result, employees who work for a DC-based employer but do not spend more than half of their time physically working in DC are not covered by the protections of the new law. The law also does not apply to casual babysitters who work in someone’s home or to partners in a partnership.
Under the law, an employer may prohibit an employee from moonlighting if the “employer reasonably believes” the employee’s moonlighting will result in the employee’s disclosure or use of the employer’s confidential or proprietary information, violate conflicts of interest rules, or impair compliance with legal, regulatory, or contractual requirements. An employer may also limit an employee’s moonlighting in higher education under certain circumstances.
The newly-in-effect Non-Compete Clarification Amendment Act provides valuable protections for many Washington, D.C. employees. If you have concerns about your non-compete agreement, please contact us today.
