DC’s Non-Compete Law: What Changed in 2022 and Why Most DC Non-Competes Are Now Unenforceable

Most DC professionals who signed a non-compete agreement with an employer have been operating under the assumption that the agreement is valid and must be respected. For agreements entered into before October 1, 2022, that assumption needs to be examined carefully. For agreements entered into after that date, the assumption is often simply wrong. Washington, DC enacted the Non-Compete Clarification Amendment Act, and the law it amended, the Ban on Non-Compete Agreements Amendment Act, collectively created one of the most restrictive non-compete regimes in the country. A wrongful termination attorney DC-based employees consult about post-termination restrictions routinely finds that the non-compete they signed either does not apply to them, was entered into after the law prohibited it, or contains provisions that violate the statute in ways that can affect the underlying employment relationship.

DC’s legislative approach here was deliberate. The DC Council determined that non-compete agreements harm workers by limiting their employment options, suppressing wages, and creating barriers to career mobility, and that these harms were not justified by the legitimate business interests employers typically cite. Understanding the specifics of what the law does, who it covers, and what it does not cover is essential for any DC employee who has been terminated and is now trying to determine what their former employer can and cannot legally prevent them from doing.

What DC’s Non-Compete Ban Actually Does

The Ban on Non-Compete Agreements Amendment Act, as amended by the Non-Compete Clarification Amendment Act, prohibits covered employers from requiring or requesting that covered employees sign non-compete provisions. It also prohibits employers from enforcing non-compete provisions against covered employees. A covered employer is any person or entity that employs workers in DC. A covered employee is any DC employee other than those in the specific exempt categories discussed below.

The prohibition applies to non-compete provisions in employment agreements, offer letters, and standalone non-compete agreements. It also applies to non-compete provisions in separation agreements and severance packages. An employer who fires an employee and then presents a severance agreement requiring the employee to refrain from working for competitors is presenting a non-compete provision in a severance context, and it is covered by the statute.

Critically, the law also prohibits employers from retaliating against employees for refusing to agree to a non-compete, for asking the employer to explain how a non-compete provision complies with DC law, or for challenging the enforceability of a non-compete provision. An employee who was fired, disciplined, or threatened with adverse action because they questioned the validity of a non-compete may have a retaliation claim under the statute.

The Exceptions: When Non-Competes Are Still Permitted in DC

The DC non-compete law has several exceptions, and understanding them precisely matters because employers frequently claim their agreements fall within an exception when they do not.

Medical specialists: Physicians and other healthcare practitioners who meet a specific total compensation threshold may be subject to non-competes, but only within defined limits on geographic scope, duration, and the activities that can be restricted. The allowable duration is no more than two years, the geographic scope must be reasonable in relation to the employer’s actual operations, and the restricted activities must be limited to services the employee actually provided.

Highly compensated employees: Workers whose total compensation exceeds a defined threshold, which is set by the DC Department of Employment Services and subject to annual adjustment, may be subject to non-competes with specific limitations on duration (maximum one year), scope (limited to specific activities the employee performed), and notice requirements. Employers must provide the employee with a copy of the non-compete and the required written disclosures.

Sale of business: Non-compete agreements in connection with the bona fide sale of a business, partnership interest, or substantially all of a business’s assets remain valid under DC law. This exception is narrowly construed and applies only to the context of an actual business sale, not to ordinary employment relationships.

What the statute does not provide an exception for is most of what employers try to protect: client relationships, institutional knowledge, training investments, and general competitive concerns. The legislature specifically considered and rejected the argument that these interests justify non-competes for the broad population of DC employees. An employer claiming that a non-compete is valid because of confidential information concerns or client relationship protection is not invoking a recognized exception. Those interests are addressed through non-disclosure and non-solicitation agreements, which the DC statute does not prohibit.

Non-Solicitation vs. Non-Compete: An Important Distinction the Statute Preserves

DC’s non-compete ban applies to non-compete provisions, which restrict an employee from working for competing employers or engaging in competitive business activities. It does not prohibit non-solicitation agreements, which restrict an employee from soliciting the employer’s clients or employees after leaving. Non-disclosure agreements, which protect genuinely confidential information, are also not affected.

This distinction matters because employers frequently present documents labeled “non-solicitation agreements” that contain provisions that function as non-competes, either by defining the restricted activities so broadly that most competitive employment is prohibited, or by including restrictions that go beyond client and employee solicitation into general competitive employment.

A document titled “confidentiality and non-solicitation agreement” that includes a clause prohibiting the employee from working for any company that competes with the employer’s business for two years is a non-compete provision regardless of what the document is called. DC’s statute covers the substance of the restriction, not its label. Reviewing an agreement that contains both permissible non-solicitation language and prohibited non-compete provisions requires parsing which clauses are valid and which are not.

What Employers Must Tell Employees About Non-Competes Under DC Law

When an employer enters into a valid non-compete agreement with an employee in one of the exempt categories, DC law requires the employer to provide the employee with a copy of the non-compete provision and specific written disclosures explaining how the agreement complies with DC law. The employer must provide these disclosures at least fourteen calendar days before the employee is required to sign the agreement or before the employee starts work, whichever is earlier.

Failure to provide the required notice and disclosures is a violation of the statute regardless of whether the underlying non-compete would otherwise be valid. An employer who presented a non-compete agreement to a highly compensated employee without providing the fourteen-day notice period, or without providing the required written disclosure of the DC law requirements, may have created an unenforceable agreement even for an employee who would otherwise fall within the exception.

When Non-Compete Issues Connect to Wrongful Termination in DC

The non-compete statute’s anti-retaliation provision creates a direct link between non-compete enforcement and wrongful termination law. An employee who was fired after questioning whether a non-compete was valid, after refusing to sign a non-compete provision in a new employment agreement, or after informing their employer that the provision was unenforceable under DC law has a potential retaliation claim under the statute.

The statute also creates an enforcement mechanism through the DC Department of Employment Services, which can investigate complaints and impose civil penalties on employers who violate the law. Employees who were required to sign unlawful non-compete agreements, or who faced enforcement threats for prohibited provisions, can file complaints with the DOES.

Additionally, when a fired DC employee receives a severance agreement containing a non-compete provision, that provision may be void under the statute, and an attorney reviewing the severance agreement can identify the violation before the employee signs anything. This is one of the most practical applications of the DC non-compete law, because employees routinely sign severance agreements containing non-compete provisions that are either entirely prohibited or that exceed the statutory limits, giving up employment freedom in exchange for compensation they could have received without accepting the restriction.

Talk to a Wrongful Termination Attorney in DC Before Accepting Post-Employment Restrictions

A non-compete that appears binding on its face may be prohibited, limited, or procedurally defective under DC’s current law. An employer threatening enforcement of such an agreement, or retaliating against an employee who challenged it, may have created legal liability rather than protecting a legitimate business interest. DC’s non-compete law represents one of the most significant changes to the employment landscape in the region in the past decade, and most DC employees have not been told clearly how it changed their rights.

The Mundaca Law Firm’s wrongful termination attorney DC practice reviews non-compete agreements, evaluates whether they are valid under current DC law, and represents employees who were retaliated against for questioning or refusing non-compete provisions. If you were fired, disciplined, or threatened because of a non-compete dispute, or if you received a severance agreement containing a non-compete and are not sure whether it is enforceable, contact The Mundaca Law Firm to schedule a consultation before you limit your employment options based on a restriction that may not bind you.