The District of Columbia appears poised to join the growing number of nearby states regulating and limiting restrictive covenant agreements in the employment context.
Unanimously passed by the D.C. City Council on December 15, 2020 and signed by Mayor Muriel Bowser on January 11, 2021, the “The Ban on Non-Compete Agreements Amendment Act of 2020” goes further than recent laws enacted across the country. It is a ban on virtually all non-compete agreements.
Specifically, the bill would prohibit employers from requiring or requesting that their employees not: (1) be employed by another person; (2) perform work or provide services for pay for another person; or (3) operate their own business. Remarkably, the ban would potentially apply during employment, not just after an employee leaves. How courts would reconcile the ban during employment with common law fiduciary duties and the duty of loyalty remains to be seen.
Now that the Mayor has signed the bill, it will be sent to Congress for review and will become law unless Congress passes a joint resolution disapproving it and the President signs that resolution within a thirty-day period. The law will become applicable upon approval of a budget and financial plan that includes its fiscal effect. This is expected to take place later this year when the District of Columbia’s 2022 budget and financial plan is approved.
Our Practice Group members explore these issues and others in our article on the potential ramification of the bill and the procedural steps needed for it to become law. We will continue to monitor the bill’s status and its impact, and we will provide updates on material developments.