This postponement provides the Council more time to consider the Clarification Act before the Act takes effect.

In our Alerts published January 22 and February 17, 2021, we detailed the various provisions of the broad, new Washington, D.C., Ban on Non-Compete Agreements Amendment Act of 2020 (the Act), slated to take effect once the District of Columbia Council funded the law through the appropriations process. Among other provisions, the Act would render void and unenforceable any agreement prohibiting an employee from working for a competitor following employment and while the employee is still employed by the employer. The ban on so-called in-term restrictive covenants―standard provisions that prevent an employee from simultaneously working for a competitor of his or her employer―would be the first of its kind in the country.

The Act was originally anticipated to take effect on October 1, 2021, but was delayed following the introduction of Bill 24-256, the Non-Compete Conflict of Interest Clarification Act of 2022, designed to address concerns raised by the business community about the impact of the Act.

The Clarification Act has yet to be considered by the District of Columbia Council. Accordingly, on March 1, 2022, the Council passed an emergency resolution that further postponed the effective date of the Act to October 1, 2022. This postponement provides the Council more time to consider the Clarification Act before the Act takes effect.

The proposed amendments in the Clarification Act, if passed, would partially roll back the Act’s ban on in-term restrictive covenants by allowing an exception for “bona fide conflict of interest” provisions. The Clarification Act defines a “bona fide conflict of interest” provision as:

[A]n otherwise lawful written provision or workplace policy that bars an employee from accepting money or a thing of value from a person during the employee’s employment with the employer because the employer reasonably believes the employee’s acceptance of money or a thing of value from the person will cause the employer to: (A) conduct its business in an unethical manner; or (B) violate applicable local, state, or federal laws or rules.

The proposed amendments in the Clarification Act would also allow employers to bar an employee’s use, in addition to the disclosure, of confidential, proprietary or sensitive information, client lists, customer lists or trade secrets during or after the employee’s employment with the employer.

What This Means for Employers

Given the continuing uncertainty on the effective date of the Act as well as the proposed and/or future amendments, District of Columbia employers should review with legal counsel their standard offer letters, application forms, employment agreements, employee handbooks and other workplace policies. We will continue to monitor this legislation for any updates.

For More Information

If you have any questions about this Alert, please contact Lawrence H. Pockers, Shannon Hampton Sutherland, Bryan Shapiro, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group, any of the attorneys in our Non-Compete and Trade Secrets Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.