The Decline and Fall of the Non-Compete Agreement

There is a general trend in the United States disfavoring non-compete provisions in NDAs and employment agreements. The laws are not retroactive but any agreements entered into after the effective date may be invalid if they contain a non-compete. In the DMV area, the current status of the law are:

District of Columbia

Starting October 1, 2022, DC employers will no longer be allowed to use non-compete provisions with employees earning less than $150,000 and licensed physicians earning less than $250,000.

Maryland

Effective October 1, 2019, MD employers were prohibited from using non-compete provisions for any employees that make less than $15 per hour or $31,200 annually.

Virginia

As of July 1, 2020, VA employers may not enter into a non-compete provision with a “low-wage employee.” The threshold for a “low-wage employee” is adjusted by the Virginia Department of Labor and Industry every year effective July 1st. Until July 1, 2022, the threshold is less than $1,195 per week or $62,140 a year.

What can you do?

While you may be concerned about how you can protect your businesses, not all is lost. Companies can still protect themselves through other important provisions in their employee agreements, especially non-disclosure and non-solicitation provisions. They can also take preventative measures to ensure that their trade secrets are properly protected. It is important to review your employment agreements to ensure compliance and take appropriate steps to protect your business.