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Gentle Reminder: DC Bans Non-Competes

TLDR

Employers in DC can no longer have their employees sign non competes. There are employee notice requirements related to this as well.  


Overview

Washington DC passed the Ban on Non-Compete Agreements Amendment Act. This new law bans employers from putting non-competes in place with their employees. It goes into effect on March 15, 2021. There are notice requirements that must go out to employees within 90 days of the law going into effect. DC employers should make sure that they not only adhere to the law practically (as there are penalties for non-compliance) but that they keep an eye on notice requirements for current and future employees. The language in the sample notice requirement below must be issued to all DC employees:

No employer operating in the District of Columbia may request or require any employee working in the District of Columbia to agree to a non-compete policy or agreement, in accordance with the Ban on Non-Compete Agreements Amendment Act of 2020.

Inside Baseball

While Washington DC has always been employee friendly, this law is now one of (if not, THE) strongest laws banning non-competes across the US. It aligns closely to what states like California, Oregon, Oklahoma, and others have done. These lessen or remove completely the ability for companies to restrict their employees from competing with their company. Nearby Virginia has also gotten into the mix by banning non-competes for employees who are considered “low-wage.”

States that ban non-competes generally view them as an economic harm to employees and their ability to earn a living. Washington DC, along with nearby Virginia and Maryland (as well as specific counties in Maryland) are beginning to enact more progressive employment laws. With the makeup of DC’s council changing since the last election, and given the impact the COVID-19 pandemic has had on unemployment claims and job mobility, DC employers should expect to see more employee-friendly legislation introduced and passed.

What’s next

Finally, aside from employers notifying their employees of this new law, they may want to consider reviewing and/or making updates to their employee handbooks, policies and procedures, offer letters, PIIA/CIIA agreements, and new hire notices and posters. Consider reviewing non-compete agreements made prior to 3/15/21. While they still may be enforceable, decide if they are worth keeping in place. You won’t be able to put any new restrictions in place with future employees. Expect to see more states consider or introduce similar legislation.  


Suitless will automatically put the above steps into place for our current clients. Contact us if you have questions about what the tactical HR/Finance implications are for responding to DC’s ban on non-competes.

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