How can employers protect their business interests without resorting to non-compete obligations? If you are an employee who has access to legitimately sensitive business information, you may be asked to sign an agreement to protect that information. The new law does not prohibit companies from entering into agreements with employees that prevent the employee from submitting disclosure: Earlier this year, the Mayor of Washington, D.C., signed the law, the Non-Compete Agreements Amendment Act of 2020 (the “Act”), which imposes far-reaching restrictions on non-compete obligations during and after the termination of employment of employees in the District of Columbia. We have already reported on this bill. When the law was passed in October 2019 as Bill No. B23-0494 was intended to discourage workers earning less than three times the minimum wage from having to sign non-compete obligations. By imposing non-compete obligations on workers below a certain income threshold, the bill protected low-wage workers from being forced to sign non-compete clauses to keep their jobs. This approach has followed the path taken by several other States to restrict the use of non-compete obligations. However, before the bill was put to the vote, the council changed direction by removing the income cap from the bill. With two exceptions, the version approved by Council and signed by the Mayor amounts to a complete ban on agreements and policies containing non-compete obligations. What is a non-compete obligation? A non-compete obligation in an employment contract prohibits the employee from performing a job similar to his or her current role, from working for another employer in competition with his or her current employer, or from operating his or her own business. A non-compete obligation may vary in terms of time and geographic scope, but in fact, these clauses limit employees` employment opportunities. (2) the alleged non-compliance with a non-competition obligation or a workplace directive made illegal by this Title; As adopted, the prohibition of non-compete obligations does not extend to confidentiality provisions.
The law defines confidentiality provisions as those that prevent an employee from “disclosing the employer`s confidential, proprietary or sensitive information, customer list or trade secret.” The bill would expand that definition to include confidentiality provisions that prohibit employees from disclosing and using protected information. Daryl Leon: So, Guy, that`s a profound difference from what we see in a number of county states. It is not common, but certainly not uncommon, for a state to prohibit non-compete obligations after termination of employment. Nevertheless, does it appear that employers are prohibited from restricting employees to work for a competitor when they are currently employed? Just like Washington, D.C. Employers are starting with the district`s recent non-compete clause, and legislative changes are already underway. As we have already pointed out, D.C. Earlier this year, enacted the No-Compete Agreements (D.C Amendment Act, 2020. Act 23-563) (the “Act”), which prohibits employers from requiring or requiring an employee to sign an agreement containing a non-compete provision. A more detailed summary and analysis of the law is available in our December 22, 2020 article. As Fox has not pointed out before, the law would make the District of Columbia one of the few jurisdictions in the United States to almost completely prohibit the use of employment bans. The date of application of the law – the date on which employers are subject to its conditions – has been extended to April 1, 2022. The law only applies to agreements concluded from the date of validity.
As the calendar turned toward 2021, the District of Columbia Council threw a late curve ball at employers in the District of Columbia that most didn`t see coming. The Prohibition of Non-Competition Agreements (D.C Act 23-563)(2020) was passed by Council on December 15, 2020 and signed by Mayor Muriel Bowser on January 11, 2021. The legislation, which will create an almost total ban on non-compete obligations, surprised the business community in Washington, D.C. The final text is much broader than the smaller bill originally proposed, and the bill goes far beyond laws passed in other jurisdictions to restrict the use of post-employment non-compete obligations. Guy Brenner: That`s exactly it, Daryl, and that`s what makes this law so broad and so different from what we`ve seen so far. And the thing to keep in mind is that the law doesn`t just prohibit formal contractual agreements where you usually see non-compete obligations. Yet it also prevents employers from having policies that prohibit simultaneous or post-employment jobs. .