The D.C. Council voted Tuesday to ban non-compete clauses for employees whose total compensation is less than $150,000 a year. The bill heading to the mayor’s desk for review is the second time in under two years that lawmakers sought to restrict non-competes, or clauses in employment contracts that prevent employees from working at a competitor or operating their own business during or after their current position. Depending on who you ask, the bill is either described as a watered-down version of the previous ban or a compromise.

D.C. is somewhat exceptional in that only a few states regulate non-compete clauses. Neighboring Maryland only prohibits the use of non-competes for employees who earn $15 per hour, while Virginia has no ban. Studies increasingly show that non-competes harm workers by limiting job mobility, as well as limits their opportunities for higher pay.

In December 2020, councilmembers unanimously passed a blanket ban on non-compete clauses, and the mayor signed the measure into law. But the law never took effect in part because enforcement wasn’t funded. Over the last year and a half, various groups (from the D.C. Chamber of Commerce to the Washington Nationals) took advantage of the delay in implementation and lobbied lawmakers, calling for carve-outs so employers could use non-competes in certain circumstances. They found a sympathetic ear with Ward 2 Councilmember Brooke Pinto, who’s amendment ultimately prevailed.

Here’s what the revised non-compete ban does:

• Bans non-competes for employees whose total compensation per year is less than $150,000, or $250,00 for medical specialists. Compensation includes bonuses, commissions, overtime premiums, and vested stock.
• Maintains the status quo for broadcasters, specifically on- or off-air content creators, so that a ban on non-competes for these employees continue.
• Covers employees who either spend a majority of their work time working in D.C. for the employer, or their employer is based in D.C. and they “regularly” spend a “substantial amount” of work time for the employer. If their employment has not started yet, then the employee has the aforementioned expectation.
• Clarifies employers can still bar their employees from using or disclosing confidential and proprietary information during or after employment.
• Requires employers to provide the non-compete in writing to eligible employees at least 14 days before employment or execution of the agreement.

The offices of mayor and the attorney general will enforce the city’s non-compete ban. An employer who fails to comply with the law could face a penalty of anywhere between $350 to $1,000 for each violation. If signed into law by Mayor Bowser, it could take effect as early Oct. 1.

At-Large Councilmember Elissa Silverman, who chairs the labor committee, introduced both non-compete bans. But the ban that’s expected to take effect in a few months deviated from her proposal. Silverman was amendable to some changes after her ban received criticism. At the last legislative meeting, on June 28, Silverman moved legislation forward that would allow an employer to use non-compete agreements with employees who have a base salary of $200,000 or more. She said the Consortium of Universities of the Washington Metropolitan Area and D.C. Hospital Association supported the salary ceiling. She also created an exception for broadcasters, recalling how a non-compete derailed the radio career of Radio One’s Randy Dennis. “Radio personalities are different. They are their own secret sauce,” she said during the meeting. 

Pinto introduced a competing amendment, changing the definition of “highly compensated employee,” and she removed the carve out for broadcasters. “In order to remain competitive, employers must be able to protect trade secrets and sensitive and strategic confidential information,” said Pinto, when introducing her amendment. “Having a specific carve out for one industry preventing any non-compete agreements makes little sense to me given the diverse array of industries in the District and the need of broadcast businesses to have reasonable non-competes in the same way any other industries can.”

Silverman accused Pinto of watering down her legislation, while Pinto defended her provision as representing the top 15% of the city’s wage earners. Silverman sought to put Pinto’s amendment in perspective for those who might earn more than the salary ceiling: “I ask every councilmember, how are you going to pay your mortgage? The $25,000 daycare costs, your car payment, and everything else on the lifestyle that you are currently living. That’s what we are asking people to do when we draw the line at $150K. … Why base salary? We all know our salaries. I would ask people in this room who know their total compensation?”

Councilmembers voted 7 to 5 to replace Silverman’s amendment with Pinto’s. The Council then passed the legislation on first reading. The Council then nearly unanimously voted a second time in favor of the bill, but with an amendment from Chairman Phil Mendelson that added back the carve-out for broadcast employees. He says he changed his opinion after hearing from the labor union representing media, SAG-AFTRA.

Ward 3 Councilmember Mary Cheh recused herself because her second employer (George Washington University) lobbied for the bill, while Ward 4 Councilmember Janeese Lewis George voted against the bill. Lewis George shared the concerns of Silverman, believing the bill favored employers over their workers.