D.C.’s Recent Ban on Non-Competes Forces Businesses to Rethink Policies, Agreements, and Practices
Non-competes in D.C. employment agreements and workplace policies are void and unenforceable against any employee, except licensed physicians with annual salaries in excess of $250,000 and whose primary business is “the delivery of medical services,” under the new Ban on Non-Compete Agreements Act of 2020. The ban became effective Jan. 11, 2021.
The law does not prohibit non-competes in sales agreements and acknowledges lawful provisions of restrictive covenants that restrict employees from disclosing the employer’s confidential, proprietary, or sensitive information, client list, customer list, or a trade secret, as legally defined.
The law makes it imperative for employers with employees in D.C. to review and revise all workplace policies (e.g, moonlighting, outside employment) and agreements to the extent they ban employees from:
being employed by another person;
performing work or providing services for pay for another person; or
operating the employee's own business.
Further, employers should take inventory of practices that govern which employees have access to legally protected information to ensure only those who need to know have access to that information and determine other ways to protect business interests that were once protected by non-competes.
The new law also prohibits retaliation or threats to retaliate against an employee for:
refusing to agree to a non-compete provision;
the failure to comply with the employer's non-compete provision or policy;
inquiring about the employee's rights;
informing another person or entity about a possible violation of the law; and/or
requesting from the employer entitled information regarding notice of rights under the law.
Employers are required to specifically inform employees, in writing, that,
No employer operating in the District of Columbia may request or require any employee working in the D.C. area to agree to a non-compete policy of agreement, in accordance with the Ban on Non-Compete Agreements Amendment Act of 2020
no later than 90 calendar days after the applicability date of the Act, seven calendar days after an individual becomes an employee of the employer; and/or 14 calendar days after the employer receives a written request for such statement from an employee.
Non-competes for medical specialists are permitted
If an employer requires a physician to agree to a non-compete, the employer must provide 14 days' notice of non-compete provisions and verbatim notice that
The Ban on Non-Compete Agreements Amendment Act of 2020 allows employers operating in the District of Columbia to request non-compete terms or agreements (also known as "covenants not to compete") from medical specialists they plan to employ. The prospective employer must provide the proposed non-compete provision directly to the medical specialist at least 14 days before execution of the agreement containing the provision. Medical specialists are individuals who: (1) perform work on behalf of an employer engaged primarily in the delivery of medical services; (2) hold a license to practice medicine; (3) have completed a medical residency; and (4) have total compensation of at least $250,000 per year.
Anti-retaliation provisions apply to physicians, as well.
Penalties for violation
Penalties comprise no less than $350 and no more than $1,000 for each violation of the law, except that each violation of anti-retaliation provisions shall be for not less than $1,000.
Regulations are forthcoming
Regulations will govern record maintenance, access by D.C. government officials, how to provide records demanded, and employers’ rights to contest disclosure or a violation found without 1) proper notification and 2) an opportunity to request a formal hearing. Persons aggrieved may bring administrative complaints and civil actions.