Originally passed in December 2020 to ban all non-competes entered into with D.C. employees, the D.C. Council bent to pressure from the business community to modify the law and provide a framework for when non-competes apply. For example, Bill 24-256 now makes non-competes enforceable only for employees earning $150,000 or more in annual compensation (or $250,000 or less for medical specialists). Certain broadcast employees are excluded. The modification now allows employers to bar an employee’s use and disclosure of confidential and proprietary information during and after the employee’s employment.
This amended law applies to employees who either:
- Spend more than 50% of their work time in the District, or
- Have employment based in the District and regularly spend a substantial amount of work time in the District and not more than 50% of their work time in another jurisdiction.
What About Neighboring Employers in Maryland and Virginia?
Virginia and Maryland have also banned non-competes for certain employees. For example, Virginia’s regulation on restrictive covenants prohibits binding low-wage earners, which is defined as one who earns $1,290 per week as of Jan. 1, 2022 (an annual salary of approximately $67,080). Maryland’s restrictive covenant regulation exempts employees who earn equal to or less than $15 per hour or $31,200 annually.
The D.C. Non-Compete Clarification Amendment Act is subject to a 30-day Congressional review period under the Home Rule Act heading toward the October 1st effective date. In the meantime, employers should analyze their existing compensation structures to ensure compliance. For non-highly compensated employees, employers should amend employment agreements to ensure non-compete provisions and policies are removed. Importantly, there will be a poster/notice requirement that must be provided on or around the effective date.
