Washington, D.C. employers will not need to scrap all their non-compete agreements after all. On July 12, 2022, the D.C. Council (the “Council”) passed the Non-Compete Clarification Amendment Act of 2022 (B24-0256) (the “Amendment”), which among other things, tempers the District’s near-universal ban on non-compete provisions to permit restrictions for highly compensated employees. For further analysis on the original D.C. Ban on Non-Compete Act, please see our previous articles here and here.
The Council delayed the initial ban several times in response to feedback from employer groups. However, barring an unlikely veto or Congressional action during the mandatory review period, the amended ban will take effect as of October 1, 2022. We detail the key revisions to the ban below.
In addition to permitting non-compete agreements with medical specialists making more than $250,000 annually, the revised ban allows D.C. employers to enter non-compete agreements with almost any employee whose total compensation is or is reasonably expected to be more than $150,000 per year. The Amendment clarifies that “compensation” includes bonuses, commissions, overtime premiums, vested stock, and other payments provided on a regular or irregular basis; however, fringe benefits will not count toward the threshold unless they are paid in cash or cash equivalents. Beginning January 1, 2024, the threshold will...
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