Ahead of the Curve: D.C. Employers – Review Your Policies for Non-Compete and Second Jobs NOW

March 5, 2021

A new law is the boldest attempt to protect employees, and you may face fines for failing to comply.

By Patrick J. Kearney, Esq.
Partner at Selzer Gurvitch Rabin Wertheimer & Polott, P.C.
March 5, 2021

A few days ago, a new District of Columbia law went into effect which may be the boldest attempt to protect employees from covenants not to compete and from restrictions on working side gigs or second jobs.

The Ban on Non-Compete Agreements Amendment Act of 2020 (“BNCAAA”) completely changes the law on covenants not to compete and working second jobs.

There are fines and penalties for the failure to abide by the BNCAAA. D.C. employers need to change their non-compete policies and their no second jobs policies immediately, including revising employee handbooks to reflect the changes.

This also means that if a D.C. employer has a protectable business interest that it has previously tried to protect through the use of a covenant not to compete, then the employer needs to be more focused on what it is protecting and how best to protect that interest within the scope of the new law. Employers need to review and enforce their confidentiality restrictions and consider narrow and well-crafted non-solicitation covenants which allow an employee to work for a competitor but prohibit the employee from taking employees or customers from the employer.

What You Need to Know:

Effective immediately, with one notable exception, any NEW agreements containing a covenant not to compete are void. This law does not affect covenants not to compete that were in place and legal prior to the enactment of the law.
The exception is that non-competes under the traditional common law rules of business necessity for a reasonable period in a reasonable geographic area can be used for a “medical specialist,” which is a licensed physician engaged primarily in the practice of medicine who has completed a medical residency; and has total compensation of at least $250,000 per year.
1. But, if an employer plans to ask a “medical specialist” to sign a non-compete, that person must be provided a copy of the agreement containing the non-compete provision at least 14 days before execution of the agreement; and
2. The following written notice must be given to the medical specialist at the same time the employer provides the proposed non-compete provision:
  - “The Ban on Non-Compete Agreements Amendment Act of 2020 allows employers operating in the District of Columbia to request non-compete terms or agreements (also known as “covenants not to compete”) from medical specialists they plan to employ. The prospective employer must provide the proposed non-compete provision directly to the medical specialist at least 14 days before execution of the agreement containing the provision. Medical specialists are individuals who: (1) perform work on behalf of an employer engaged primarily in the delivery of medical services; (2) hold a license to practice medicine; (3) have completed a medical residency; and (4) have total compensation of at least $250,000 per year.”
The BNCAAA goes beyond banning non-competes that begin when an employee leaves an employer. It also bans a District of Columbia employer from prohibiting an employee from holding another job while the employee is working for the employer – even if the second job is with a competitor. Further, an employer is required to give each employee the text section of the law banning non-competes and banning a policy against holding other jobs – within 90 days of the law’s enactment, within 7 days of hiring an employee and within 14 days of a written request by an employee for the policy. The language of the notice is particular, so it is now quoted below in full:
1. No employer may require or request that an employee sign an agreement that includes a non-compete provision.
2. A non-compete provision contained in an agreement that was entered into on or after the applicability date of this title between an employee and an employer shall be void as a matter of law and unenforceable.
3. No employer may have a workplace policy that prohibits an employee from:
  1. Being employed by another person;
  2. Performing work or providing services for pay for another person; or
  3. Operating the employee’s own business.
4. No employer may retaliate or threaten to retaliate against an employee for:
  1. The employee’s refusal to agree to a non-compete provision;
  2. The employee’s alleged failure to comply with a non-compete provision or a workplace policy made unlawful by this title;
  3. Asking, informing, or complaining about the existence, applicability, or validity of a non-compete provision or a workplace policy that the employee reasonably believes is prohibited under this title to any of the following:
    1. An employer, including the employee’s employer;
    2. A coworker;
    3. The employee’s lawyer or agent; or
    4. A governmental entity; or
  4. Requesting from the employer the information required to be provided to the employee pursuant to subsection (e) of this section.
5. (1) An employer shall provide an employee who works for the employer with the text of paragraph (2) of this subsection in writing, no later than:
  1. Ninety calendar days after the applicability date of this title;
  2. Seven calendar days after an individual becomes an employee of the employer; and
  3. Fourteen calendar days after the employer receives a written request for such statement from the employee.

(2) “No employer operating in the District of Columbia may request or require any employee working in the District of Columbia to agree to a non-compete policy or agreement, in accordance with the Ban on Non-Compete Agreements Amendment Act of 2020.”

Let Selzer Gurvitch help you.

For questions, please contact the author, Patrick J. Kearney, Esq. or any of the other attorneys at Selzer Gurvitch if we can help you or if you would like more information about covenants not to compete, second jobs policies and/or employee handbooks.

Patrick J. Kearney, Esq.
pkearney@sgrwlaw.com
(301) 634-3114

Disclaimer: The information contained in this material is not intended to be considered legal advice and should not be acted upon as such. Because of the generality of this material, the information provided may not be applicable in all situations and should not be acted upon without legal advice based on specific factual circumstances.

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