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New Legislation Bans Non-Compete Provisions in Employment Contracts and Employer Policies

On January 11, 2021, the D.C. Council enacted legislation to ban non-compete provision in employment contracts and employer policies in the District of Columbia. The legislation, known as the “Ban on Non-Compete Agreements Amendment Act of 2020” (A23-0563), became effective on March 16, 2021.

The legislation contains five main provisions that are generally applicable to employers; specifically, the legislation provides that:

(a) “No employer may require or request that an employee sign an agreement that includes a non-compete provision”;

(b) “A non-compete provision contained in an agreement that was entered into on or after the [legislation’s effective date] between an employee and an employer shall be void as a matter of law and unenforceable”;

(c) “No employer may have a workplace policy that prohibits an employee from: (1) Being employed by another person; (2) Performing work or providing services for pay for another person; or (3) Operating the employee’s own business”;

(d) “No employer may retaliate or threaten to retaliate against an employee” for refusing, failing to comply with, or questioning or asking about a non-compete provision; and

(e) An employer must provide its employees with notice of the prohibition against non-compete provisions in the form and manner prescribed by the legislation.

The legislation defines “non-compete provision” to mean, subject to limited exceptions, “a provision of a written agreement between an employer and an employee that prohibits the employee from being simultaneously or subsequently employed by another person, performing work or providing services for pay for another person, or operating the employee’s own business.”

The legislation applies to all employers operating in the District of Columbia, except for the District of Columbia government and the United States government. And it applies to all employees or prospective employees who do or would perform work in the District of Columbia on behalf of an employer, except for certain volunteers, persons working for religious organizations, and babysitters.

Medical specialists also are not protected by the above-described five main provisions and thus may be subject to non-compete provisions. However, they are afforded certain limited procedural protections such as prior written notice. The legislation narrowly defines “medical specialist” to mean a licensed medical physician who has completed a medical residency, works “on behalf of an employer engaged primarily in the delivery of medical services,” and is compensated by the employer “at least $250,000 per year.”

The legislation provides enforcement mechanisms and penalties. Among other things, it provides that a person aggrieved by a violation may pursue an administrative complaint or a civil action in court.

Additional details about the legislation are provided in its text and legislative history.