New Washington, D.C. Law Bans Non-Competes Nearly Entirely; the District Becomes the Latest (and Most Prohibitive) Member of the DMV to Restrict Employer Use of Non-Competes. 

On Behalf of | Mar 3, 2021 | Employment Law

In 2019, Maryland enacted a law that essentially voided non-compete provisions for employees making $31,200 or less annually.  In 2020, Virginia took it a step further with its ban and private right of action for employees making less than Virginia’s average weekly wage.   Now, Washington D.C. has enacted what amounts to an almost total ban on non-compete provisions in employment agreements, regardless of income level or position within a company.  Once Congress votes to approve the measure, the law will become effective in the District (on or about March 19, 2021).

What it does:

  • bans employers operating in D.C. from entering into or enforcing non-competes with employees providing services in D.C., whether the non-compete provisions are located in an employment agreement or part of the employer’s workplace policies or practices
  • bans covered employers from prohibiting employees from moonlighting or operating their own business
  • bans the above prohibitions both during and after employment
  • prohibits retaliation against an employee for not only refusing to sign or comply with a non-compete provision, but prohibits retaliation for “asking, informing, or complaining about the existence, applicability, or validity of a non-compete provision or a workplace policy that the employee reasonably believes is prohibited” under the Act
  • requires a specific notice to employees no later than: (1) 90 days of the Act going into effect using certain specified text in the Act; (2) seven days after hiring; or (3) 14 days after the employer receives a written request for such statement from the employee.

What it does not do:

  • does not apply to charitable volunteers and doctors making $250,000 or more a year
  • does not apply to non-competition agreements reached in connection with the sale of a business
  • does not void non-compete agreements entered into before the effective date
  • does not ban confidentiality or trade secrets agreements
  • does not appear to ban non-solicitation of customers agreements

How it is enforced

  • Administrative complaint to the Mayor’s office (subject to fines up to $3,000 per violation)
  • Civil private right of action

Employers with employees in D.C. who are concerned about competitive practices post-employment should consider immediately reviewing and/or implementing non-competes before the effective date (since the law operates to void only those non-competes entered into after the effective date).  This is also a good time to review just how robust the company’s non-solicitation, NDAs, and confidentiality/trade secrets agreements are.

— If you have further questions or concerns or would like assistance evaluating your business’s potential exposure under this new law, please contact:

Genevieve Bradley                                                                         Sean Gibbons

(703) 485-3535                                                                                     (804) 441-8440

[email protected]                                                       [email protected]

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