The District of Columbia passed one of the nation’s most stringent regulations on covenants not to compete earlier this year. Except in very limited circumstances, the law states employers may not require or request employees sign an agreement that includes a non-compete provision, and employers cannot have a workplace policy that prohibits an employee from “(1) [b]eing employed by another person; (2) [p]erforming work or providing services for pay for another person; or (3) [o]perating the[ir] own business.”
As we noted at the time, although the law was passed and signed by Mayor Muriel Bowser, its restrictions would not become “applicable” until the fiscal effects of the law were included in an approved budget and financial plan.
On July 20, 2021, the D.C. Council had a first reading on the Fiscal Year 2022 Budget Support Act of 2021. Buried in this wall of text is a provision that would amend Section 302 of the non-compete act to include an “applicability date” of April 1, 2022.
So, April 1, 2022 is the date we are eyeing for the D.C. non-compete ban to “apply.” Of course, things could change, but this is as strong an indicator as we have seen. We will continue to monitor these developments and provide an update once the “applicability date” for the D.C. non-compete ban is confirmed.
In the meantime, employers should act now to ensure they do not run afoul of the D.C. non-compete ban once it does become applicable. Jackson Lewis attorneys in the Restrictive Covenants, Trade Secrets and Unfair Competition practice group are available to advise on these issues.