The information below is for general educational purposes and is not legal advice.
A new law, the Ban on Non-Compete Agreements Amendment Act of 2020, will take effect later this year. The law bans the use of non-compete clauses for most workers in the District.
What is a non-compete clause?
A non-compete clause in an employment contract prohibits the worker from pursuing employment similar to their current role, working for another employer who competes against their current employer, or operating their own business. A non-compete clause can vary in terms of time period and geographic scope but, in effect, these clauses limit employees’ job opportunities.
Why ban non-compete agreements?
Non-compete provisions harm workers and labor markets by limiting opportunities for workers and making it harder for businesses to recruit workers. Across industries and wage-levels, non-compete agreements have been shown to reduce worker wages. Banning non-compete agreements ensures that workers are free to look for new jobs, keep multiple jobs, and start their own businesses.
What does the Ban on Non-Compete Agreements Amendment Act of 2020 do?
The law bans employers from imposing non-compete clauses for most workers. If your employer asks you to sign a contract with a non-compete clause after the law goes into effect, your employer cannot enforce that clause against you in the future. Your employer is not allowed to prevent you from seeking other employment or starting your own business. It is also unlawful for any employer to threaten or retaliate against any worker for refusing to sign or comply with a non-compete agreement.
What workers are exempt or not protected under the new law?
All non-compete clauses are void and unenforceable under the new law, except for those that bind:
- Highly compensated medical workers and their employers: For this exception to apply, a medical specialist must have a license to practice medicine, have completed a medical residency, work for an employer who primarily provides medical services, and earn more than $250,000 a year. Prospective employers must show the medical service specialist a copy of the proposed non-compete clause at least 14 days before executing the agreement, in order for it to be enforceable.
- Volunteers for educational, nonprofit, or charitable organizations who are not being paid.
- Religious officials.
- Babysitters who work in or around the residence of the employer.
How can employers protect their business interests without using non-compete agreements?
If you are an employee who has access to legitimately sensitive business information, you may be asked to sign an agreement to protect that information. The new law does not ban businesses from entering into agreements with employees that prevent the employee from disclosing:
- the employer’s confidential, proprietary, or sensitive information;
- the employer’s client list or customer list; or
- the employer’s trade secret(s).
Any agreement regarding protecting sensitive information cannot restrict an employee’s access to new or other employment opportunities in the course of enforcing those protections.
The new law also does not prevent the seller of a business from entering a contract with the buyer of that business stating that the seller agrees not to compete with the buyer’s business.
What do I do if my employer is attempting to make me sign a non-compete agreement, or is trying to enforce a non-compete clause against me?
The Mayor and the Office of the Attorney General are empowered to enforce the ban on non-compete agreements and seek penalties against violators.
Workers can report violations of the Ban on Non-Compete Agreements Amendment Act of 2020 to OAG at (202) 442-9828. Learn more about workers’ rights in the District and how to get help if those rights are being violated at https://oag.dc.gov/workers-rights.
Correction: A previous version of this FAQ stated that the law went into effect on March 16, 2021. The law does not go into effect until there is further action by the Council for the District of Columbia. OAG will update this FAQ when the effective date becomes available.