On December 17, 2020, the Council of the District of Columbia unanimously passed the Ban on Non-Compete Agreements Amendment Act of 2020 (the “Act”). The Act for the first time in D.C. will make void and unenforceable non-compete agreements that are entered into after the effective date of the law. This is a major change in the law, that will have a big impact on companies that perform work in the District.
Five Key Takeaways:
- The Act does not apply to confidentiality and non-disclosure agreements, which are still enforceable. However, the Act is silent on non-solicitation provisions that prohibit employees from working with the employer’s customers or recruiting its employees.
- Employers will be prohibited from implementing policies that prevent employees from working for other employers even during their employment, such as anti-moonlighting policies.
- Employers will be prohibited from retaliating against employees for exercising any of their rights under the Act.
- The Act applies to all employees who perform work in DC and prospective employees that employers “reasonably anticipate may perform work” in DC.
- Employers will be required to provide written notice of the Act to their employees. Specifically, employers must provide to employees in writing, the following language from the Act: “No employer operating in the District of Columbia may request or require any employee working in the District of Columbia to agree to a non-compete policy or agreement, in accordance with the Ban on Non-Compete Agreements Amendment Act of 2020.”
Although the Act is still subject to the Mayor’s veto, it appears this will likely become law in a matter of days. DC employers should begin to review existing “moonlighting” policies, confidentiality agreements, and non-solicitation agreements in light of this executed change. DC employers should also consult with their HR directors and legal counsel, particularly in the federal Government Contract space, to consider what changes should be considered given this breaking news.