District of Columbia’s Ban on Non-Compete Agreements

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At the beginning of 2021, District of Columbia became a jurisdiction that completely bans the use of non-compete agreements. Generally, a noncompete agreement is a contract between an employee and an employer in which the employee agrees not to enter in competition with the employer during or after employment for a set period of time and in a specified geographical area. On January 11, 2021, D.C. Mayor Muriel Bowser signed the Ban On Non-Compete Agreements Amendment Act of 2020. The Act applies to all D.C. private employers who have employees that perform their work in D.C. and employees whom a prospective employer reasonably anticipates will perform the work in D.C.  The Act specifically excludes the District of Columbia and United States government, volunteers, casual babysitters, and “medical specialists”. The Act defines “non-compete” as any provision that “prohibits the employee from being simultaneously or subsequently employed by another person, performing work or providing services to pay for another person, or operating the employee’s own business.” The Act does not prohibit agreements that contain provisions that restrict employees from disclosing employer’s confidential, proprietary, or sensitive information, client lists, customer lists, or trade secrets. The Act also does not prohibit non-compete provisions during the sale of a business.

Limiting non-compete agreements is not new to the DMV, as Maryland limits enforcement of non-compete agreements by barring employers from enforcing these agreements against workers earning less than or equal to $15 per hour or $31,200 per annum; and Virginia prohibits employers from entering into, enforce, or threaten to enforce a non-compete agreement with any worker whose average weekly earnings during the previous 52 weeks are less than the average weekly wage of the Commonwealth as calculated in the Virginia Code 65.2-500(b). Unlike the surrounding states, the District’s new law goes further to prohibit employer workplace policies that prohibit moonlighting, operating the employee’s own business, or retaliating against an employee who refuses to agree or fails to comply.

Contact the Johnson Law Group to ensure that your business is protected in light of the Act’s new prohibitions and ensure that your business is in compliance with the Act’s notice to employees requirements. Employers should review existing policies, offer letters, and provisions related to outside employment and revise workplace policies to adequately protect the company from non-disclosure and confidentiality obligations. Lastly, employers should review their onboarding materials to ensure that the Act’s notice requirements are satisfied.