On October 1, 2022, the District of Columbia will begin implementing a new non-compete law that prohibits the use of non-compete clauses in newly signed employment agreements affecting most everyone who works in the District of Columbia, except highly paid doctors.
The new law also prohibits employers from restricting an employee’s right to moonlight pursuant to any newly signed employment agreement.
Existing non-competes and anti-moonlighting provisions, entered into prior to the law’s effective date, will still be enforceable, but new non-competes and anti-moonlighting provisions, executed after the law’s effective date, will not be enforceable.
Once the law is implemented, employers will also be required to provide employees with notice of the law’s key provisions.
Employers will also be prohibited from retaliating against employees who talk about the above requirements or request information relating to the law.
Employers who violate the act may have to provide monetary relief to impacted employees or other financial penalties to the District of Columbia.
A. Highly Paid Doctor Carve-Out
However, even after implementation, certain types of professionals are carved out of the law’s definition of employees, most notably “medical specialists.” A medical specialist means “an individual who performs work in the District on behalf of an employer engaged primarily in the delivery of medical services and who: (i) holds a license to practice medicine; (ii) is a physician; (iii) has completed a medical residency; and (iv) has total compensation of at least $250,000 per year.”
An employer can continue to include non-compete and anti-moonlighting provisions in a new contract with a medical specialist if: (i) the proposed non-compete provision is provided directly to the medical specialist at least 14 days before execution of the agreement containing the provision; and (ii) the medical specialist is given written notice of the new District of Columbia law, using language provided in the law that outlines its coverage and applicability.
B. Delayed Implementation
These District of Columbia bans are some of the most restrictive non-compete provisions in the country.
Implementation of this law, which was passed in early 2021, has been delayed until October 2022, because of an outcry from employers that the no moonlighting prohibition runs afoul of many company conflict of interest policies.
The District of Columbia City Council may amend the law to clarify some of the simultaneous employment nuances or delay the implementation date again. Accordingly, employers should watch for developments, prepare to provide notices to employees and update standard contracts to account for the law’s requirements.
Alexandria K. Montanio
410-576-4278 • amontanio@gfrlaw.com