What to Know about Non-Compete Agreements in Washington, DC
Non-compete agreements are typically drafted to restrict employees from taking or using any of a company’s proprietary information or existing client base with them when leave and launch their own company that directly competes with their old employer. Another potential purpose of a no-compete clause is to keep employees from going to work for a competitor in the same industry. This can place severe restrictions on the employee’s ability to find a new job if he or she is facing a potential layoff or termination.
The duration of the non-compete clause can vary, lasting anywhere from a few months to several years. Because of the limiting nature of a non-compete agreement, many employers are no longer using them. However, there are some instances where they might apply to your business in Washington, DC, so it’s good to familiarize yourself with the basics.
The District of Columbia doesn’t have a specific statute that addresses non-compete agreements, but DC Code Section 28-4502 does prohibit any contractual agreement that unreasonably restrains trade. Courts may enforce the restrictions on competition if the restraint is reasonable and related to the employee-employer relationship. It must be necessary to protect the employer company’s interests, and it can’t be wider in scope or longer in duration than necessary, and you cannot have anything in the agreement that goes against public policy. Lastly, there has to be some type of consideration.
What to Focus on in Drafting a Non-Compete Agreement
The law puts the burden of proof on the employer, who must prove that the non-compete agreement doesn’t unreasonably restrict trade. If you feel it’s necessary to draft one, then it’s important to focus on key areas to maximize your chances of it being enforceable in court. Also, having a Washington, DC business law attorney draft the non-compete agreement is important to ensure it hits all the important topics while not violating any public policy.
The four areas the non-compete agreement should focus on include:
- Purpose — Why is the non-compete agreement necessary? What are the employer’s interests and concerns, and are they legitimate?
- Benefit — What is the benefit for the employee who signs this? It can vary based on what point in the employment process the agreement is drafted. At the start, it might be the job offer, or at the end of employment, it might be a severance package.
- Scope — The scope of the agreement needs to be defined. This might include a requirement to keep proprietary information private, describe the type of competitors the employee is not allowed to work for or the type of work he or she is forbidden to do, etc.
- Enforcement — It’s important to look over the agreement to ascertain whether a court might enforce it or whether it’s unreasonably restrictive.
Retaining a District of Columbia Business Law Attorney
If you need a non-compete agreement drafted, you need to retain a District of Columbia business law attorney who has experience with employment law as well. The team at Tobin, O’Connor & Ewing is skilled at all aspects of business and employment law. Contact our office online or call us 202-362-5900 to schedule a consultation.