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What You Need to Know About Washington, D.C.'s Non-Compete Agreements Ban

Risa Boerner

What You Need to Know About Washington, D.C.'s Non-Compete Agreements Ban
John Baggaley via Getty Images

On January 11, 2021, Washington, D.C., Mayor Muriel Bowser signed into law one of the most restrictive pieces of legislation in the nation relating to employers’ use of non-compete agreements to prevent employees from working for competitors. The legislation, Ban on Non-Compete Agreements Amendment Act of 2020, is not yet enforceable. If, however, it becomes enforceable as originally signed by the mayor, it will not only completely ban non-compete agreements for District of Columbia employees but will go well beyond the restrictions commonly contained in state non-compete statutes by imposing strict notice and other requirements that differ from existing state laws around the country. For example, employers

  • will be required to provide employees with notice of the new law, regardless of whether they use non-compete agreements, and
  • are banned from preventing employees from being “simultaneously” employed elsewhere, effectively calling into question the viability of relatively common “moonlighting” prohibitions.

The act, passed in a 12–0 vote of the District of Columbia Council on December 15, 2020, and signed by the Mayor on January 11, 2021, stated on its face that it would not apply until its fiscal effect was included in an approved budget and financial plan. As further described below, the District’s fiscal year 2022 budget process is still under way, but it appears the act’s fiscal effect will be included in the District’s final year 2022 budget and financial plan, and the act, or a modified version of the act, will thus become applicable and enforceable on April 1, 2022. This article summarizes the act as originally drafted and signed by Mayor Bowser on January 11, 2021.

Key Requirements of the Act

The act contains a number of notable requirements:

Sweeping Prohibition on Non-Compete Provisions

The act prohibits employers from requiring employees to sign agreements that contain non-compete provisions or maintaining equivalent policies. The term “non-compete provision” is defined to include a written agreement that prohibits an employee from “being simultaneously or subsequently employed by another person, performing work or providing services for pay for another person, or operating the employee’s own business.” The term “employee” includes any person “who performs work in the District on behalf of an employer and any prospective employee who an employer reasonably anticipates will perform work on behalf of the employer in the District.” The act goes beyond the reach of other restrictive non-compete statutes by virtue of invalidating agreements barring “simultaneous” competitive employment, as well as encompassing “prospective” employees.


The act excludes from the definition of “employee” volunteers, certain individuals who hold office in religious organizations, babysitters, and medical specialists. The act also does not apply to federal or District of Columbia government employers. The act does not ban non-compete provisions in the context of the sale of a business.

Anti-Retaliation Provisions

Employers are barred from retaliating against employees who refuse to agree to or comply with an unlawful non-compete, who ask or complain about the validity of a non-compete or policy that the employee believes to be prohibited under the act, or who requests information that the employer is required to provide under the act.

Employers Must Provide a Specific Notice to All Washington, D.C., Employees

Within 90 calendar days after the applicability date of the act, employers must provide all employees who work for the employer within the District with the following notice: “No employer operating in the District of Columbia may request or require any employee working in the District of Colombia to agree to a non-compete policy or agreement, in accordance with the Ban on Non-Compete Agreements Act of 2020. In addition, new employees working in the District must be provided with that text within 7 calendar days of their hire date, and employees who request the statement must receive it from the employer no later than 14 days after the employer receives the written request.

Employers Are Required to Maintain Records

The act requires the mayor to issue rules to implement the act, including rules requiring employers to keep and retain records relating to compliance with the act. These rules have not yet been implemented.

Impact on Existing Agreements

There is a silver lining for District employers, however. Existing non-compete agreements are excluded from the act. The act applies only to non-compete agreements entered into on or after the applicability date of the act.

What about Confidentiality and Non-Solicitation Agreements?

Another positive that employers can take from this development is that the act specifically provides that employers may continue to restrict employees from disclosing confidential, proprietary, or sensitive information; client lists; customer lists; or trade secrets. The act is silent, however, regarding non-solicitation agreements.

Current Status

The act was signed into law on March 16, 2021, but is not yet enforceable. During the District’s fiscal year 2022 budgeting process, the City Council approved funding for the act but postponed the applicability of the act until April 1, 2022, which gives the council time to consider amendments to the act. It also gives employers more time to prepare. Pursuant to the District’s funding process, there are two steps the act goes through before it becomes applicable and enforceable. First, the mayor signs both (i) the Fiscal Year 2022 Budget Support Act of 2021 (B24-0373) approved by the Council, which designates April 1, 2022, as the applicability date for the act (the mayor signed the Budget Support Act on August 23, 2021), and (ii) the Fiscal Year 2022 Local Budget Act of 2021 (B24-275) approved by the council, which allocates $105,000 to funding the act (the mayor signed the Budget Act on September 13, 2021). Second, the Local Budget Act must be approved by Congress after a 30-day congressional review period. The Local Budget Act was transmitted to Congress on September 21, 2021, and is projected to become law on November 16, 2021. It is rare for Congress to make any alterations to the District’s budgets, and for that reason, barring other roadblocks, the act likely will be funded and become applicable and enforceable on April 1, 2022. As previously noted, however, the City Council has the ability to amend the act before it becomes applicable on that date.

Future Implications for Employers

Employers should be aware of the enforcement mechanisms and penalties that they may face under the act. Penalties for violations include both administrative and civil remedies. The mayor and the attorney general for the District of Columbia may assess fines of $350 to $1,000 for each violation of the non-compete and notice requirements, and more than $1,000 for violations of the retaliation provision.

Meanwhile, aggrieved employees can file either an administrative complaint or a civil action in court, and may seek between $500 and $1,000 for each violation. Employers that attempt to enforce an agreement that is invalid under the act will be liable to the employee for at least $1,500. Fines increase with multiple violations.

In summary, the act imposes affirmative duties on employers to not only refrain from using non-compete provisions in employment contracts and policies but also to inform employees of the law. The act does not apply retroactively, but employers must cease using non-compete provisions after April 1, 2022. Employers that continue to have non-compete provisions in employment contracts and policies after April 1, 2022, or that neglect to inform employees of the law may face penalties for statutory violations.