The Non-Compete Agreements Amendment Act of 2020 has been making waves in the business community, with many companies scrambling to update their policies and contracts to comply with the new law. This legislation, which was signed into law by the mayor of Washington, D.C. in January, places significant restrictions on the use of non-compete agreements by employers.
What is a non-compete agreement, and why are they used?
A non-compete agreement is a contract that an employee signs which typically prohibits them from working for a competing company for a certain period of time after leaving their current employer. These agreements are often used by businesses to protect their trade secrets, customer relationships, and other confidential information. Employers also use non-compete agreements as a way of retaining talented employees, by making it more difficult for those employees to leave and work for a competitor.
What are the restrictions imposed by the Non-Compete Agreements Amendment Act of 2020?
Under the new law, non-compete agreements are limited in several ways. Firstly, the law prohibits employers from requiring or requesting that their employees sign non-compete agreements unless the employee earns at least $87,654.00 per year. This means that employers cannot use non-compete agreements for low-wage workers, who are often the most vulnerable and in need of job mobility.
Secondly, the law requires employers to provide employees with written notice of their right to consult with legal counsel before signing a non-compete agreement. The notice must be given to the employee at least 14 days before they are asked to sign the agreement.
Thirdly, the law limits the duration of non-compete agreements to 1 year after the termination of employment, with a few exceptions for certain high-level employees and independent contractors.
What does this mean for employers?
Employers in Washington, D.C. need to be aware of these new restrictions and update their policies and contracts accordingly. Employers should also be aware that violating the new law can result in fines or other penalties.
In addition, employers should consider whether non-compete agreements are really necessary for their business. While there may be cases where non-compete agreements are appropriate, many businesses may find that other forms of legal protection, such as non-disclosure agreements or trade secret protection, may be sufficient to protect their interests.
Overall, the Non-Compete Agreements Amendment Act of 2020 is a significant change in the law that will have important implications for employers and employees in Washington, D.C. Employers should take the time to review their policies and contracts to ensure compliance with the new law, while employees should be aware of their rights and options when it comes to non-compete agreements.