The District of Columbia is creating the broadest ban on noncompetition agreements in the country. The D.C. Council passed The Ban on Non-Compete Agreements Amendment Act (the “Act”) last year, but its applicability date was tied to the approval of the city’s budget. The Act prohibits most post-employment non-compete agreements (it excludes physicians). In addition, no D.C. employer may have a workplace policy that does not allow its employees from working simultaneously for other employers or from having his or her own business.

While the Act may be amended before its applicability date of April 1, 2022, employers in D.C. are advised to enter into any desired noncompetition agreements before April, because the Act is not retroactive. The existing enforceability standards for non-compete restrictions generally allow for reasonable agreements not to compete, which have been held to be limited in time (such as for three years or less) and scope (such as limited to clients solicited while employed or within x miles of the employer’s place of business).

Following an outcry from the business community, the Act was amended to permit broader confidentiality agreements that prohibit employees from disclosing or using the employer’s confidential information. The Act also does not prohibit an otherwise lawful provision between a buyer and a seller of a business, wherein the seller agrees not to compete with the buyer’s business.

Employers in D.C. will be required to provide employees with a notice in writing stating that “No employer operating in the District of Columbia may request or require any employee working in the District of Columbia to agree to a non-compete policy or agreement, in accordance with the Ban on Non-Compete Agreements Amendment Act of 2020.” This notice must be provided by June 30, 2022, or seven days after an individual becomes an employee of the employer.

For more information, call us at (301) 986-5570 or complete our contact form.