Employers should take note of several recent amendments to existing D.C. employment-related laws and a new restriction on cannabis in the workplace.
Three Key Changes to the D.C. Human Rights Act
The D.C. Council has amended the Human Rights Act (“DCHRA”), D.C.’s anti-discrimination law, in three important ways:
- (1) “individuals working or seeking work as an independent contractor,” are now protected under the law;
- (2) “homeless status,” is a new protected characteristic and;
- (3) harassing conduct is no longer required to be “severe or pervasive,” but rather may depend on the “totality of the circumstances.” The law provides that “no specific number of incidents or specific level of egregiousness is required.”
The amended law also now requires employers to post an Equal Employment Opportunity poster that accounts for these amendments. D.C. employers should revisit their employment policies and trainings to ensure they align with the new definition of harassment and coverage of independent contractors and are inclusive of homeless status as a new protected characteristic. In addition, employers should consider whether the extension of the law to independent contractors warrants changes in their practices and processes for recruiting, onboarding and terminating their relationships with independent contractors. For example, employers may want to consider utilizing a release that includes discrimination and harassment claims under this law where appropriate when severing the relationship with an independent contractor.
Employers May Not Take Adverse Actions Against Employees for Recreational Cannabis Use
Under the Cannabis Employment Protections Amendment Act of 2022, which will likely become enforceable in July 2023, employers may not take any adverse action (which it defines as terminating, suspending, demoting, refusing to hire, failing to promote, or otherwise penalizing) against an employee because of the employee’s recreational cannabis use, participation in D.C. or another state’s medical cannabis program, or failure to pass an employer-required or requested cannabis drug test.
There are several exceptions to this prohibition:
- the law does not apply to “safety-sensitive” positions (i.e. employees that operate equipment or vehicles);
- employers will not violate the law if (a) their actions are required by federal statute, federal regulations, or a federal contract or funding agreement; or (b) the employee used, consumed, possessed, stored, delivered, transferred, displayed, transported, sold, purchased, or grew cannabis at the place of employment, while performing work for the employer, or during the employee’s working hours.
Employers may still adopt reasonable drug-free workplace policies that (1) require post-accident or reasonable suspicion drug testing of employees in safety-sensitive positions for cannabis or other drug use, and/or (2) that are necessary to comply with certain federal laws, contracts or funding, and/or (3) that prohibit employees from using or having cannabis in the workplace.
Employers should review their drug policies now to ensure compliance with the law come this summer. Employers should also track the law’s enforceability date as well as any guidance and/or posters that the Office of Human Rights may publish in connection with the law.
Employees Are Eligible to Receive More Paid Parental, Medical, and Family Leave
Under the Paid Family Leave Amendment Act, D.C. employees are now entitled to a maximum of 12 weeks (as opposed to the former 8 weeks) of paid leave for qualifying parental leave, medical leave, and/or family leave during a 52-week period. Eligible employees may receive up to:
- 12 weeks to bond with a new child (increased from 8 weeks);
- 12 weeks to care for a family member with a serious health condition (increased from 6 weeks);
- 12 weeks to care for the employee’s own serious health condition (increased from 6 weeks);
- 2 weeks to care for a pregnancy (there has been no change to the amount of time for this leave).
The Ban on Non-Compete Agreements is Now Effective
The D.C. Non-Compete Clarification Amendment Act of 2022 (the “Act”) is now effective. The D.C. Council passed the Act after receiving criticism from D.C. employers regarding the very restrictive Ban on Non-Compete Agreements Amendment Act of 2020, which we previously wrote about here. The new Act significantly curtails some of the prohibitions in the 2020 legislation. For example, the Act allows non-compete agreements with highly compensated (and certain other) employees as well as confidentiality and anti-moonlighting policies under certain circumstances.
The Act defines “employer” as an individual, partnership, general contractor, subcontractor, association, corporation, or business trust operating in D.C., or any person or group of persons acting directly or indirectly in the interest of an employer operating in D.C. in relation to an employee, including a prospective employer.
A “covered employee” is an individual who is not a “highly compensated employee” and who (i) spends more than 50 percent of their work time working for the employer in D.C., or (ii) whose employment for the employer is based in D.C. and the employee regularly spends a substantial amount of their work time for the employer in D.C. and not more than 50 percent of their work time for that employer in another jurisdiction. This definition also includes new employees that have not yet started work but whom the employer reasonably anticipates will fall into one of the above two categories.
The following employees are exempted from the Act, meaning that non-competes may still be implemented for them: (1) highly compensated employees (although other requirements apply – see below), (2) casual babysitters in or about the residence of the employer, (3) partners in a partnership, and (4) D.C. and federal government employees.
Highly Compensated Employee
A “highly compensated employee” is an employee who is reasonably expected to earn in a consecutive 12-month period, or who has earned in the preceding 12-month period, $150,000 or more in “minimum qualifying annual compensation.” If the employee is a medical specialist, the minimum qualifying compensation threshold is $250,000 or more.
“Compensation” is defined as all monetary remuneration an employer may pay or promise the employee, including base salary or hourly wages, bonuses, cash incentives, commissions, overtime, vested stock (including restricted stock units), and/or other payments provided on a regular or irregular basis, except for fringe benefits unless they are paid in cash or cash equivalents.
Employers should track the minimum qualifying compensation requirement as the thresholds will increase annually, beginning on January 1, 2024.
Ban on Non-Compete Agreements and Policies
The Act bans employers from requiring or requesting that a covered employee sign an agreement or comply with a workplace policy that includes a non-compete provision. The Act defines “non-compete provision” as “a provision in a written agreement or workplace policy that prohibits an employee from performing work for another for pay or from operating the employee’s own business.” The term “workplace policy” includes non-documented matters of practice.
The term “non-compete provision” does not cover the following provisions or policies (meaning that they are lawful under the Act):
- A non-compete provision contained within or executed contemporaneously with an agreement between the seller of a business and one or more buyers of that business wherein the seller agrees not to compete with the buyer’s business.
- Non-disclosure or confidentiality provisions that prohibit or restrict employees from disclosing, using, selling, or accessing the employer’s confidential employer information or proprietary employer information.
- A non-compete provision or workplace policy that prohibits or restricts employees from accepting money or a thing of value for performing work for a person other than the employer, during the employee’s employment with the employer, because the employer reasonably believes the employee’s acceptance of money or a thing of value under such circumstances will: (i) result in the employee’s disclosure or use of confidential employer information or proprietary employer information, (ii) conflict with the employer’s, industry’s, or profession’s established rules regarding conflicts of interest, (iii) constitute a conflict of commitment if the employee is employed by a higher education institution; or (iv) impair the employer’s ability to comply with D.C. or federal laws or regulations, a contract, or a grant agreement.
- A non-compete provision that provides a long-term incentive, which is defined as bonuses, equity compensation, stock options, restricted and unrestricted stock shares or units, performance stock shares or units, phantom stock shares, stock appreciation rights, and other performance driven incentives for individual or corporate achievements typically earned over more than one year.
Notably, the Act does not address non-solicit provisions, which was likely an intentional omission by the D.C. Council. Courts, however, will likely soon be asked to interpret the law on this issue.
Non-Compete Agreements for Highly Compensated Employees
Employers that include non-compete provisions in agreements with highly compensated employees must include the following in the agreement:
- (1) the functional scope of the competitive restriction, including what services, roles, industries or competing entities the employee is restricted from performing work in or on behalf of;
- (2) the geographic limitations of the work restriction; and
- (3) the term of the restriction, which cannot exceed 365 days from the date the employee separates from employment (if the employee is a medical specialist, the term may not exceed 730 days).
Employers must also provide highly compensated employees with a copy of the non-compete agreement at least 14 days before the employee starts employment or, if already employed, at least 14 days before the employee must execute the agreement. Further, employers must provide highly compensated employees with the following notice at the same time as the non-compete agreement:
The District’s Ban on Non-Compete Amendment Act of 2020 limits the use of non-compete agreements. It allows employers to request non-compete agreements from highly compensated employees, as that term is defined in the Ban on Non-Compete Agreements Amendment Act of 2020, under certain conditions. [Name of Employer] has determined that you are a highly compensated employee. For more information about the Ban on Non-Compete Agreements Amendment Act of 2020, contact the District of Columbia Department of Employment Services (DOES).
If an employer has implemented a workplace policy that includes a non-disclosure or confidentiality provision, anti-moonlighting provision, conflict of interest provision, or non-compete provision in connection with a long-term incentive, it must provide a written copy of the provisions to all employees (i) within 30 days after the employee’s acceptance of employment, and (ii) any time the policy changes.
The Mayor is required to issue rules to implement the Act’s recordkeeping provisions, which will address the preservation and retention of workplace policies, non-compete provisions, and other records related to compliance. Employers should track the rules and be prepared to comply with any recordkeeping requirements.
The Act is prospective only, and does not affect non-compete agreements entered into before October 1, 2022, meaning that non-compete agreements (unless for highly compensated or other exempted employees) entered into on or after that date are void and unenforceable.
Mintz’s Employment Practice stands ready to assist with any compliance concerns you may have.