On April 2, 2021, the Ban on Non-Compete Agreements Amendment Act of 2020 ("Non-Compete Act"), was signed into law in the District of Columbia. Our previous Alert detailing the Non-Compete Act can be found here. Uniquely in D.C., the Non-Compete Act was required to be attached to a fiscal budget - in order to be implemented and, ultimately, to determine its effective date. On August 27, 2021, the Fiscal Year 2022 Budget Support Emergency Act of 2021 ("Emergency Act") was published to the D.C. register. Included within this Emergency Act was an amendment to the original Non-Compete Act, pushing back the effective date from March 16, 2021 to April 1, 2022. Succinctly, beginning on April 1, 2022 - less than six months from now (and absent any change to the pending law) - D.C. law will nearly abolish non-compete restrictions.
The Non-Compete Act includes no "look-back" provision, meaning it will not impact current, enforceable non-compete restrictions. Instead, its new provisions will apply only to new restrictions and agreements implemented on April 1, 2022 and thereafter. The important takeaway: those who employ individuals to work in D.C. are strongly encouraged to review their current restrictive covenants - or the lack thereof - so they can plan and act, as warranted, in advance of the April 1st deadline. This might include drafting, implementing or modifying such restrictions with current employees, accelerating - or at least attempting to accelerate - certain new hires (who would ordinarily be subject to these restrictions) or, alternatively, shifting your focus and reliance upon other restrictive covenants still available to protect your business interests after April 1st. As any strategy (restriction) used going forward is likely to be subject to heightened scrutiny in 2022 and the years ahead, seeking professional counsel before making any critical changes - or deciding to forego them - can be a wise investment.
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