Mon, 02/08/2021
On December 17, the D.C. Council unanimously passed the Ban on Non-Compete Agreements Amendment Act of 2020. On January 11, Mayor Bowser of Washington D.C. signed the Act into law. If the Act makes it through a 30-day congressional review process, it will “make void and unenforceable non-compete” agreements entered after the law’s effective date throughout the District of Columbia, but it is not retroactive.
A non-compete agreement is a contract between an employee and their employer that limits the employee’s ability to work for a competitor. The D.C. legislation will prohibit employers from barring employees from working for competitors during the term of their employment and after their employment ends. The legislation also protects employees against retaliation if the employee refuses to follow former non-compete policies and requires employers to provide some type of notice about employees’ new rights under the non-compete ban. Violations of the ban can lead to penalties ranging from $350-$3,000 per instance. Under this new legislation, non-compete agreements would only be permitted for a very small pool of workers that include babysitters, medical specialists (broadly, physicians who earn more than $250,000 annually), and instances where the seller of a business agrees not to compete with the buyer.
Notably, client-facing employers will have to review their policies that prohibit employees from working with current or previous clients to determine if their policies prohibit employees from being “employed by another person [or] performing work or providing services for pay for another person.” The legislation does state that nondisclosure and confidentiality agreements are not in its scope. The District’s approach is stricter than many – if not all – other states that have placed restrictions on non-compete agreements, which have come under scrutiny in recent years for preventing low- and middle-income workers from switching jobs even though they likely do not have access to sensitive business information or customer relationships.
There are eight jurisdictions that have some prohibition on non-competes for low wage workers: Maine, Maryland, New Hampshire, Washington, Rhode Island, Illinois, Virginia, and Massachusetts. Moreover, Oklahoma, North Dakota and California have wide bans on non-compete agreements. The District joins the growing list of jurisdictions that aim to protect vulnerable low wage workers.
If you believe your employer has illegally required you to sign a non-compete agreement, contact MSE at info@mselaborlaw.com.
