Ban On Non-Compete Agreements Amendment Act Of 2019

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Summary: A Council D.C bill proposed earlier this month, if passed, would render inapplicable competition bans against employees who earn less or less than three times the minimum wage. C D, currently $14 per hour. Thus, an employee would have to earn more than $42 an hour before the worker could be subject to a non-compete regime. December 6, 2019, 10:00 a.m. Room 500 John A. Wilson Building 1350 Pennsylvania Avenue, NW Washington, District of Columbia 20004 The D.C. Council is considering legislation that would prohibit the application of non-compete rules for entry-level and middle-income workers and that would apply to D.C workers who earn up to three times minimum wage, which is currently equivalent to US$87,654 per year. Studies have shown that the use of non-compete rules leads to lower wages, larger wage gaps for workers due to gender and race, and a lower probability that workers will receive a wage increase, even in strong labor markets. These contracts prevent workers from earning extra pay or receiving higher wages through part-time work from other employers by transferring their skills to another employer. Employers who have used non-compete rules include WeWork and Jimmy John`s.

While the relatively high income threshold can be a challenge for some employers, determining whether workers are below the income threshold is not an easy calculation. First, the law`s income cap is tied to the D.C minimum wage – not the federal minimum wage – which has changed 8 times in the last 14 years and is expected to change again in 2020. While the bill is clear that it would not apply retroactively to agreements, it also does not specify the impact of a future change to the D.C minimum wage on existing agreements. In other words, an employee earning $43.50 per hour would exceed the current income threshold and a non-compete clause would apply against that employee under the bill (provided the agreement is entered into after it comes into force). However, as it is currently designed, the bill appears to lift the same restriction of competition if D.C. the hourly minimum wage increases by 1,$US, as planned next July. Legal restrictions on the application of non-competition rules have gained in importance in recent years, with an unprecedented increase in 2019. Over the past year, six states have passed or amended laws that affect when and how employers can impose and enforce non-compete rules on their employees — Maine, Maryland, New Hampshire, Oregon, Rhode Island, and Washington. With each of these statutes, new or revised, which are now in force, marks the beginning of 2020 a good time for employers to check compliance with their non-competition rules and guidelines.

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