District of Columbia Mayor Muriel Bowser signed the Ban on Non-Compete Agreements Amendment Act of 2020 into law on January 11, 2021. The law will take effect after a 30-day period of congressional review and the law’s subsequent publication in the District of Columbia Register. It is not expected that Congress will block this law from taking effect.
What does the law do and is it retroactive?
The new law prohibits employers from requiring or requesting an employee or prospective employee to sign an agreement with a non-compete provision. The new law also voids any non-compete agreements entered after the effective date of the law. The new law is not retroactive to the extent that non-compete agreements entered before the effective date remain valid and enforceable. The law is, however, retroactively applicable to workplace policies (i.e., rules and restrictions, either written or matters of practice, governing the conduct of employees).
Are there exceptions?
Yes. The non-compete ban does not apply to:
What must DC employers do to ensure compliance with the new law?
Beside not asking employees or prospective employees to enter into non-compete agreements, employers must also ensure that workplace policies do not prohibit employees from: being employed by another person; performing work or providing services for pay for another person; or operating the employee’s own business. The law also prohibits employers from retaliating against an employee for actions related to the ban.
The new law also requires employers to provide written notice of the Ban on Non-Compete Agreements Amendment Act of 2020 to employees. The written notice must be provided to employees no later than 90 days after the effective date, within 7 days of a new employee’s hiring, and within 14 days of an employee’s request.
What are the penalties for violating the new law?
The Mayor may assess administrative penalties, ranging between $350 and $1,000 for each violation of the new law’s non-compete ban and notice requirements. The Mayor may also assess penalties of at least $1,000 for each instance of retaliation taken against employees related to the new law.
Employers may also be liable for penalties payable to each effected employee for each violation. The penalties payable to employees range from $500 to $3,000, depending on the nature of the violation.
The new noncompete law requires DC employers to update employment agreements, separation agreements, and other workplace policies and practices related to non-competes. The Lipp Law Firm is available to assist DC employers to ensure compliance with this new law. Contact us today to assist with your company’s employment and business law needs.