California Dreaming about Noncompete Ban in D.C.
The District of Columbia has passed the Ban on Non-Compete Agreements Amendment Act, which could make Washington, D.C. the most easterly U.S. jurisdiction to generally prohibit such restrictive covenants in employment.
California, North Dakota and Oklahoma already have broad limitations on such non-compete agreements, leading some employees and employers to set up shop there to escape non-compete obligations. The prospect of having such a restriction-free zone two hours from Philadelphia could open greater possibilities – and threats – of competition for employers and employees in this region.
The Act also would prohibit employment policies that stifle competition during or after employment by covered employers - those operating in D.C.
But before employers or employees swarm Washington to set up new noncompete-free offices, there are a few limitations to consider:
- D.C.’s Act will not become law unless and until Congress approves, which has not yet happened.
- The Act does not have a retroactive effect on non-compete agreements in existence before its effective date.
- The Act does not ban non-solicitation covenants.
- The Act will restrict employers’ agreements and enforcement actions in the District only.
And, most importantly to all, the Act creates an exemption for babysitters – don’t ask me why, I have no idea.