As of October 1, 2022, a new District law called the Ban on Non-Compete Agreements Amendment Act of 2020, DC Code 32–581 makes it illegal for employers to impose noncompete clauses and policies (noncompetes) on many District employees. You can find it HERE.
We've written about non-competes before. You can find that article HERE.. But this law is a game changer.
What are noncompetes?
Noncompete provisions, often found in employment contracts, limit employees' ability to work for competing businesses or in some cases start their own businesses. Here are some examples provided by the Office of the Attorney General ("OAG"):
- A fast-food restaurant prohibiting its employees from working for any competing fast-food businesses during and after their employment
- A hospital prohibiting its nurses from working at any other hospital within a 10-mile radius for 2 years after employment
- A gym prohibiting its trainers from starting their own physical fitness business within 3 years of employment
What does the new DC law prohibit?
The new law prohibits employers from imposing noncompetes on most District employees who make under $150,000 per year. Employees who earn over $150,000 can only be subject to a one-year noncompete, and only if the worker is notified in advance, except that medical specialists who earn over $250,000 per year can be subject to a two-year noncompete.
For employees not covered by the new law, a noncompete provision may still be illegal and unenforceable under other District laws related to contracts and antitrust.
Why did DC ban noncompetes?
Noncompetes are harmful to workers because they limit worker mobility and depress worker wages—and studies show this holds across all industries and wage-levels. Noncompetes also make it harder to recruit workers, which can be harmful to businesses.
The District's noncompete law ensures that workers have the freedom to look for new jobs, work multiple jobs, and start their own businesses, and it ensures that businesses can freely compete with one another.
Who enforces the Ban on Non-Compete Agreements Amendment Act of 2020?
You can. But so can prosecutors. OAG is currently investigating complaints brought by workers. OAG recently settled an investigation into Aquila Fitness Consulting Systems, Ltd. for its wage and hour practices and its use of illegal noncompetes. As part of the settlement, the company agreed that it would immediately stop using noncompetes for workers who made under $150,000 and would notify employees that they are no longer bound by the noncompetes.
OAG also recently sent a letter to the D.C. Bar Legal Ethics Committee, requesting an opinion on whether it is a violation of any of the D.C. Bar Rules of Professional Conduct for attorneys to participate in drafting or executing illegal or unenforceable contracts like noncompetes.
Should I Hire an Attorney to look at my Non-Compete Agreement?
Quality legal advice is important, especially if getting the right answer to your employment rights could make the difference between you taking a new job or having to sit on the unemployment line until your non-compete expires. We provide formal opinion letters to our clients about whether their non-compete agreements are enforceable. We also advise companies whether their non-competes comply with the Ban on Non-Compete Agreements Amendment Act of 2020. If you're looking for legal advice on non-competes, give us a call.