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Non-Compete Agreements banned in the District of Columbia

| Dec 3, 2020 | Firm News |

On November 30, 2020, the Washington D.C. Council took the first of two votes to enact a ban on non-competes that applies to all employees, except for those who work for the D.C. and federal governments. There is also an exception for physicians who have completed a residency and are earning over $250,000.

https://lims.dccouncil.us/downloads/LIMS/43373/Other/B23-0494-ANS_B23-494_Ban_on_Non-Competes.pdf

This legislation still awaits mayoral approval, but passed by a wide enough margin that it should be veto proof. The bill also creates a private cause of action, in addition to allowing the DC Attorney General to initiate administrative enforcement.

This ban is not retroactive, and only applies to non-competes entered into after the effective date. It would not prohibit non-solicitation provisions or confidentiality agreements that protect trade secrets.

The summary and key excerpts are:

  • To ban non-compete provisions in employment contracts and employer policies, to protect employees from being required to sign non-compete agreements, to make void and unenforceable non-compete provisions entered into after the applicability date of this act, to prohibit an employer from retaliating or threatening 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, or inquiring about the employee’s rights or informing another person or entity about a possible violation of title I of this act, to exempt medical specialists from the law’s requirements, to protect medical specialists by requiring their employers to provide 14 days’ notice of non-compete provisions and certain informative language, to require that employers inform employees of title I of this act, to require that the Mayor and the Attorney General administer and enforce title I of this act consistent with their respective powers and rights under An Act To provide for the payment and collection of wages in the District of Columbia and the District’s Administrative Procedure Act, to authorize the Mayor to collect administrative penalties for violations of title I of this act, to authorize employees to bring administrative complaints and civil actions against employers for violations of title I of the act, to provide statutory penalties for violations of title I of this act; to amend An Act To provide for the payment and collection of wages in the District of Columbia to provide that revenue from administrative penalties recovered under title I of this act shall be deposited into the Wage Theft Prevention Fund and used to enforce the provisions of title I of this act and other employee protection laws; and to repeal the Broadcast Industry Contracting Freedom Act of 2002.
  • Sec. 101. Definitions.
  • (5) “Non-compete provision” means 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 term “non-compete provision” does not include:
    • (A) An otherwise lawful provision that restricts the employee from disclosing the employer’s confidential, proprietary, or sensitive information, client list, customer list, or a trade secret, as that term is defined in section 2(4) of the Uniform Trade Secrets Act of 1988, effective March 16, 1989 (D.C. Law 7-216; D.C. Official Code § 36-401(4)); or
    • (B) An otherwise lawful provision contained within or executed contemporaneously with an agreement between the seller of a business and one or more buyers of that business wherein the seller agrees not to compete with the buyer’s business.
  • Sec. 102. Non-compete rights and restrictions.
  • (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 applicability date of this title 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:
    • (1) The employee’s refusal to agree to a non-compete provision;
    • (2) The employee’s alleged failure to comply with a non-compete provision or a workplace policy made unlawful by this title;
    • (3) 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 this title to any of the following:
      • (A) An employer, including the employee’s employer;
      • (B) A coworker;
      • (C) The employee’s lawyer or agent; or
      • (D) A governmental entity; or
    • (4) Requesting from the employer the information required to be provided to theemployee pursuant to subsection (e) of this section.