D.C. Moves Back Applicability Date of New Non-Compete Law

Daniel L. Morgan and Kevin M. Passerini

Earlier this year, Washington, D.C.’s mayor signed legislation, the “Ban on Non-Compete Agreements Amendment Act of 2020” (the “Act”), which imposes sweeping limitations on during-employment and post-employment non-compete agreements for employees in the District of Columbia. We previously reported on this legislation.           

Although the Act stated that it was to take effect following its publication in the District of Columbia Register, it also included the following provision: “This act shall apply upon the date of inclusion of its fiscal effect in an approved budget and financial plan.”

In other words, notwithstanding the Act’s definition of an earlier effective date, the Act was not slated to go into effect until the date it was included in D.C.’s 2022 budget—referred to as the “applicability date”—which most expected to occur by October 1, 2021. Shortly after passage, there were rumblings that Council members were considering amendments to the law—ranging from, among other things, a delay in the applicability date to exemptions for bona fide conflict of interest policies to income thresholds for the ban on non-competes, as opposed to an outright ban.

On August 10, 2021, the D.C. Council approved a budget—signed by D.C.’s mayor on August 23, 2021—that delays the applicability date of the Act until April 1, 2022. This postponement is significant because the Act’s limitations on non-competes is not retroactive, which provides employers with more time to continue to enter into non-compete agreements that satisfy the existing standards for determining the enforceability of non-compete restrictions rather than the far more limiting standards included in the Act.

Time will tell whether any substantive amendments materialize and modify the Act’s limitations prior to April 1, 2022.

“In Term” Covenants Not to Compete Void or Valid?

California Employers May Restrict Their Employee’s Ability to Compete During the Term of Employment

Caitlin I. Sanders

Overview of California Noncompete Law

California employers know well that they cannot restrict their former employees from competing after the employment relationship ends. With limited exceptions, California law invalidates every contract under which a person is prevented from engaging in his or her profession, trade, or business.

California Business and Professions Code section 16600 codifies California’s longstanding public policy favoring open and uninhibited competition in the employment context. California’s public policy declaration can be summed up as follows: “The interests of the employee in his own mobility and betterment are deemed paramount to the competitive business interests of the employers….” Diodes, Inc. v. Franzen, 260 Cal. App. 2d 244, 255 (1968). Continue reading ““In Term” Covenants Not to Compete Void or Valid?”

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