D.C. Non-Compete Ban Narrowed by D.C. Council

Stokes Wagner

In December of 2020, the D.C. City Council passed the Ban on Non-Compete Agreements Amendment Act of 2020, which would have added D.C. to a growing list of states and localities that either completely ban or severely limit the enforcement of non-compete agreements by completely banning non-compete agreements within the District. However, after numerous delays and challenges from the public, the Council followed up with the Non-Compete Clarification Amendment Act of 2022 on July 12, 2022.

The Amended Act, which is set to take effect on October 1, 2022 pending mayoral approval, applies to employees who (1) spend over 50% of their work time for an employer in the District, or (2) their work for an employer is based in the District, they regularly spend a substantial amount of their work time for that employer in the District, and they do not spend more than 50% of their work time for that employer in another jurisdiction. However, the previous total ban on non-compete agreements has been loosened to allow non-competes for “highly compensated employees” who earn $150,000 or more per year in total compensation. Non-competes that effect employees who do not qualify as “highly compensated” will still be banned. Notably, the Amended Act does not prevent employers from enforcing most agreements that restrict employees from disclosing confidential information or competing while working for the employer.

The changes in the D.C. ban will only effect non-competes entered after October 1, 2022. Employers who intend to enter non-compete agreements with employees after this time should be aware of the statutory requirements or risk their non-competes being deemed void and unenforceable. Valid non-competes must specify the exact services, roles, industries, or entities for which an employee may not work, contain clear limitations in time and geographic scope, and be presented in writing to the signing employee at least 14 days before beginning work.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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