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

ByDouglas C. Melcher

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 enacted statute contains five main provisions that are generally applicable to employers; specifically, the statute 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 [statute’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 statute.

The statute 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 statute 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 statute 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 statute 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 statute are provided in its text and legislative history.

Douglas C. Melcher

I am a licensed attorney with about twenty years of experience in the private practice of law. I focus my practice on advising and representing individuals, small businesses, and non-profits in civil litigation, including trial court proceedings, appeals, administrative hearings, mediation, and arbitration. I have written numerous articles for D.C. Law Blog and other publications, and am the author of Tort Claims and Defenses in the District of Columbia, which is a handbook for lawyers about civil claims for injury to persons, property, reputation, and commercial interests. Please feel free to contact me if you would like to inquire about assistance with a legal matter. I can be reached at dmelcher@melcherlaw.com or 202-427-5753. For further information about my background, click here.