D.C.’s New Non-Compete Law May Be Deferred Until 2022
As we previously reported, D.C. Mayor Muriel Bowser signed the Ban on Non-Compete Agreements Amendment Act of 2020 (the “Act”) into law on January 11, 2021. The Act is one of the most restrictive (if not the most restrictive) non-compete laws in the country. Not only does the Act ban nearly all post-employment non-compete agreements for D.C. employees, but it also bans any policy or agreement that prohibits D.C. employees from simultaneously working for other employers. Employers have been struggling to not only address how to handle the simultaneous employment ban, but also what should be a simple matter: when does the Act go into full effect? The Act unhelpfully ties its critical “applicability date” to the date its fiscal effect is included in an approved fiscal plan and budget, leaving employers scrutinizing D.C.’s budget developments to be sure they know when the law is in full effect.
In response to criticism from a number of D.C. organizations, Councilmember Elissa Silverman proposed the Non-Compete Conflict of Interest Clarification Amendment Act of 2021 (the “Bill”) on May 21, 2021. The Bill, which we previously reported on here, would amend the Act’s bar on simultaneous employment restrictions by allowing some “bona fide conflict of interest” policies. Councilmember Silverman held a public hearing to discuss the Bill on July 14, 2021, which Proskauer attended, during which witnesses from various industries expressed concern regarding the far-reaching implications of the Act, even with the amendments proposed by the Bill.
Perhaps most noteworthy, however, were Councilmember Silverman’s introductory remarks, during which she explained the Act has a fiscal impact and that she had identified funding for the Act in the Fiscal Year 2022 Budget to address those costs. However, she also shared that she was recommending the Act’s implementation date be deferred until April 1, 2022. The deferral is designed to give her committee sufficient time to consider and make changes to the Act in response to concerns raised by the business community prior to its implementation.
While D.C. employers should continue to plan for the implementation of the Act, they may have more time to enter into reasonable non-competes with their employees and the Act may be revised to add some employer-friendly provisions.