DC Implements Its Long-Delayed Noncompete Ban After Making Amendments
Author: Robert S. Teachout, XpertHR Legal Editor
September 29, 2022
The District of Columbia will finally implement its restrictions against the use of noncompete agreements beginning October 1. The implementation comes following two prior delays implemented amid debates on easing the near-total ban on such agreements under the law as originally passed.
The Ban on Non-Compete Agreements Amendment Act of 2020 (the Act) became effective March 16, 2021, and banned nearly all noncompete provisions in employment agreements and workplace policies, with limited exceptions for medical specialists. Another provision prohibited policies against "moonlighting," even when a covered employee's outside work was with a competitor or risked exposing an employer's proprietary information or trade secrets. The enacted law also:
- Prohibits retaliation or threats of retaliation against covered employees in violation of the Act;
- Requires covered employers to provide notice to covered employees of the Act's provisions; and
- Permits civil actions against covered employers for violations and provides civil and statutory penalties.
The Act's implementation date was pushed back twice, first to April 1, 2022, and finally to October 1, as the District City Council sought to make amendments addressing numerous questions and complaints from the business community, such as the Act's lack of clarity on which employees and employers were covered. As originally enacted, the Act could apply to an employer that did any business in the District, no matter how little.
The Non-Compete Clarification Amendment Act of 2022 became effective on September 21, 2022, just ahead of the Act's October 1 implementation.
The amended law:
- Limits the use of noncompete agreements to certain highly compensated employees, including medical specialists;
- Allows policies barring employees from "moonlighting" if necessary to prevent disclosure of the employer's confidential or proprietary information or if the work creates a conflict of interest;
- Requires employers to provide disclosure to all employees of the law's provisions; and
- Provides for civil and statutory penalties, included increased penalties for subsequent violations, and permits civil actions against employers for violations.