In December 2020, D.C. Mayor Muriel Bowser signed a blanket ban on noncompete clauses, which had been unanimously approved by the City Council. However, that law never took effect after significant pushback from the business community.
The Non-Compete Clarification Amendment Act (B24-0256) would reverse the blanket ban and instead limit the ban to workers making less than $150,000 per year. The measure is awaiting Mayor Bowser’s signature and, if signed, is scheduled to take effect October 1, 2022.
The Act includes the following provisions of interest:
- Bans noncompetes for employees whose total compensation per year is less than $150,000, or $250,000 for medical specialists. Compensation includes bonuses, commissions, overtime premiums, and vested stock. Beginning January 1, 2024, the thresholds will be increased and adjusted for inflation.
- Prohibits noncompetes for any employees who work for a television, radio, cable, satellite, or other broadcasting station or network regardless of total compensation.
- Permits anti-moonlighting provisions if the employer reasonably believes the outside employment could result in the disclosure or use of the employer’s proprietary information.
- Clarifies employers can still bar their employees from using or disclosing confidential and proprietary information during or after employment.
- Requires employers to provide the noncompete in writing to eligible employees at least 14 days before employment or execution of the agreement.
- Clarifies that the ban only covers employees and prospective employees if they spend or are reasonably anticipated to spend more than 50% of their work time working in D.C. for the employer.
An employer who fails to comply with the law could face a penalty of between $350 to $1,000 for each violation. The offices of mayor and the attorney general will enforce the ban.
Outlook: Mayor Bowser is expected to sign the amendment into law. D.C. joins at least 11 states which have passed laws banning noncompetes for workers making below an income threshold or for hourly workers. Looking ahead, employers should anticipate additional states to take similar action to limit and/or ban noncompete clauses.