On October 1, 2022, the District of Columbia’s new ban on non-compete agreements (the Ban on Non-Compete Agreements Amendment Act of 2020, as amended by the Non-Compete Clarification Amendment Act of 2022 (the “Act”)) went into effect. The final version of the Act is far less restrictive than originally anticipated and permits non-competes with highly compensated employees, non-competes paired with long-term incentives, and certain anti-moonlighting policies.
- As of October 1, 2022, non-competes are prohibited in the District with limited exceptions.
- Generally, employers can still enter into the following types of non-competes with District employees:
- Non-competes with highly compensated employees that do not exceed one year; provided 14 days’ advance notice is given to the employee.
- Non-competes paired with a long-term incentive.
- Non-competes entered into in connection with the sale of a business.
- The Act permits specified workplace policies like confidentiality or non-disclosure policies, anti-moonlighting policies/outside employment restrictions, and conflict of interest policies. However, the employer must provide the policies to employees before October 31, 2022, within 30 days after acceptance of employment, and any time such policy changes.
- Violations of the Act carry both administrative penalties and civil liability.
- Prohibited non-compete agreements in effect before October 1, 2022, are not subject to the Act and remain in effect. However, employers should consult with legal counsel before amending these agreements.
- Non-solicitations of customers and employees are not explicitly considered non-competes under the Act.
- The Act does not apply to the terms of a valid collective bargaining agreement.