On July 27, 2022, the District of Columbia substantially limited employers’ use of non-compete agreements in D.C. (the “Non-Compete Clarification Amendment Act of 2022”). The original bill (the “Ban on Non-Competes Amendment Act of 2020”) would have resulted in a near total ban on non-compete agreements, but in response to complaints from the business community, the City Council instead limited non-competes to those employees deemed “highly compensated.”

The law also prohibits D.C. employers from imposing “anti-moonlighting” restrictions on employees unless the employer reasonably believes that such a side engagement will result in the disclosure of the employer’s confidential or proprietary information or pose a conflict of interest. Unless blocked by Congress (which is not anticipated), the new law will take effect on October 1, 2022.

The following are some key takeaways for employers:

• Employees are covered if (i) they spend more than 50% of their work time for an employer in D.C., or (ii) their work for an employer is based in D.C., they spend a “substantial amount” of their work time for that employer in D.C., and they do not spend more than 50% of their work time for that employer in another jurisdiction.

• Covered employees who make less than $150,000 or “medical specialists” who make less than $250,000 in total compensation per year can no longer be subject to a non-compete restriction.

• Total compensation includes annual salary or hourly wages, as well as...

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