Washington D.C. joins California and Montana as one of the few jurisdictions with a nearly complete ban on noncompetition provisions applicable to employees. The Ban on Non-Compete Agreements Amendment Act of 2020 (the “Act”) was signed into law on January 11, 2021 by D.C. Mayor Muriel Bowser, and took effect following a thirty-day congressional review period. The Act, with only a few exceptions, prohibits employers from prospectively requiring employees to sign non-competition agreements, meaning that any non-competition agreements that were in place before this new Act are excluded from this Act. The Act also prohibits employers from restricting an employee’s outside business activities while employed.
The Act requires notice be provided to existing and new employees within certain time periods. It also permits the assessment of administrative penalties of $350 to $1,000 for each violation and fines of more than $1,000 for instances of retaliation. In addition, employers who violate the Act must pay each affected employee $100 to $1,000 per violation and at least $3,000 for any subsequent violations.
Employers in the District of Columbia should review their existing employment agreements and policies, and remove any restrictions necessary to ensure compliance with the Act. For questions about how this new Act impacts your business, please contact DKotkin@RKWlawgroup.com or LRubenstein@RKWlawgroup.com.
