Since October 1, 2022, a District of Columbia employer may not require or request that a “covered employee” sign a non-compete, and any such provision is void as a matter of law. That is D.C. Code § 32–581.02. Three things survive the ban and are where most real disputes now sit: agreements with highly compensated employees that meet the requirements of § 32–581.03, sale-of-business covenants, and restrictions on confidential and proprietary employer information. Waxman Litigation advises companies on which category a restriction actually falls into — before it is tested.
Is a non-compete enforceable in the District of Columbia?
It depends entirely on who signed it. For a covered employee, no — the statute voids it. For a highly compensated employee, yes, but only if the agreement contains what § 32–581.03 requires.
(a) (1) Beginning October 1, 2022, no employer may require or request that a covered employee sign an agreement or comply with a workplace policy that includes a non-compete provision. (2) A non-compete provision that violates paragraph (1) of this subsection contained in an agreement between a covered employee and an employer that was entered into on or after October 1, 2022, shall be void as a matter of law and unenforceable.
D.C. Code § 32–581.02(a)
Who counts as a “covered employee”?
The definition turns on DC work time, and it excludes highly compensated employees by its own terms.
“Covered employee” means an employee who is not a highly compensated employee and: (A) If the employee has commenced work for the employer: (i) Spends more than 50% of his or her work time for the employer working in the District; or (ii) Whose employment for the employer is based in the District and the employee regularly spends a substantial amount of his or her work time for the employer in the District and not more than 50% of his or her work time for that employer in another jurisdiction; or (B) If not yet com…
D.C. Code § 32–581.01 — Definitions
Who is a “highly compensated employee”, and what is the threshold?
An employee reasonably expected to earn, or who earned in the preceding 12 months, at least the minimum qualifying annual compensation. The statute sets that figure at $150,000, or $250,000 for a medical specialist, for the first applicable calendar year — and provides for annual adjustment thereafter. Confirm the current adjusted figure before relying on it; the number that applies is the one for the relevant calendar year, not the base figure in the statute.
What must a highly-compensated non-compete contain to be valid?
(a) For a non-compete agreement between an employer and a highly compensated employee executed on or after October 1, 2022, to be valid and enforceable: (1) The agreement must specify: (A) The functional scope of the competitive restriction, including what services, roles, industry, or competing entities the employee is restricted from performing work in or on behalf of; (B) The geographical limitations of the work restriction; and (C) (i) If the employee is not a medical specialist, a term of non-competition that does not exceed 365 calendar days from the date the employee separates from employment with the employer; or (ii) If the employee is a medical specialist, a term of non-competition that does not exceed 730 calendar days from the date the employee separates from employment with the employer; and
D.C. Code § 32–581.03(a)
| Requirement | What the statute demands |
|---|---|
| Functional scope | The services, roles, industry or competing entities the employee is restricted from working in or for |
| Geography | The geographical limitations of the restriction |
| Duration | Not more than 365 calendar days from separation, if the employee is not a medical specialist |
What is NOT a non-compete under the Act?
This is where most employer protection now lives. The definition itself carves out several otherwise-lawful provisions, so a restriction in one of these categories is not banned at all.
“Non-compete provision” means a provision in a written agreement or a workplace policy that prohibits an employee from performing work for another for pay or from operating the employee’s own business. The term “non-compete provision” does not include an otherwise lawful provision: (A) Contained within or executed contemporaneously with an agreement between the seller of a business and one or more buyers of that business wherein the seller agrees not to compete with the buyer’s business; (B) That prohibits or restricts an employee from: (i) Disclosing, using, selling, or accessing the employer’s confidential employer information or proprietary employer information; (ii) Accepting money or a thing of value for performing work for a person other than the employer, during the employee’s employment with the employer, because the employer reasonably believes the employee’s acceptance of money or a thing of value under such circumstances will: (I) Result in the employee’s disclosure or use of confidential employer information or proprietary employer information; (II) Conflict with the employer’s, industry’s, or profession’s established rules regarding conflicts of interest; (III) Constitute a conflict of commitment if the employee is employed by a higher education institution; or (IV) Impair the employer’s ability to comply with District or federal laws or regulations; a contract; or a grant agreement; or (C) That provides a long-term incentive. (16) “Proprietary employer information” means information unique to an employer that is compiled…
D.C. Code § 32–581.01(15) — definition of “non-compete provision”
| Category | Still available to an employer? | Basis |
|---|---|---|
| Non-compete on a covered employee | No — void by statute | § 32–581.02(a) |
| Non-compete on a highly compensated employee | Yes, if it meets the scope, geography and 365-day requirements | § 32–581.03(a) |
| Seller’s covenant in a sale of the business | Yes — excluded from the definition | § 32–581.01(15)(A) |
| Confidential / proprietary information restriction | Yes — excluded from the definition | § 32–581.01(15)(B)(i) |
| Conflict-of-interest and outside-work rules during employment | Yes, within the stated conditions | § 32–581.01(15)(B)(ii) |
| Long-term incentive provisions | Yes — excluded from the definition | § 32–581.01(15)(C) |
Note that “proprietary employer information” is defined to include customer lists, client lists, and trade secrets as defined in D.C. Code § 36–401(4) — which is why trade secret and confidentiality theories often matter more than the non-compete itself.
What are the penalties for getting it wrong?
§ 32–581.04 sets both administrative penalties and per-employee monetary relief, and it escalates for repeat conduct. Attempting to enforce an invalid non-compete is itself a violation.
| Conduct | Exposure |
|---|---|
| Administrative penalty, per violation | Not less than $350, not more than $1,000 (not less than $1,000 for retaliation provisions) |
| Requiring/requesting a banned non-compete (§ 32–581.02(a)(1)) | Not less than $500 and not more than $1,000 per affected employee |
| …subsequent violation | Not less than $3,000 per affected employee |
| Attempting to enforce an invalid non-compete | Not less than $1,500 per employee; not less than $3,000 for a subsequent violation |
| Retaliation | Not less than $1,000 and not more than $2,500; not less than $3,000 for a subsequent violation |
| Failure to make required disclosures (§ 32–581.03a) | $250 per affected employee |
Frequently asked questions
Does the ban apply to agreements signed before October 1, 2022?
§ 32–581.02(a)(2) voids a violating provision in an agreement “entered into on or after October 1, 2022.” Older agreements raise different questions and should be assessed individually.
Can we still stop a departing employee taking our client list?
Restrictions on confidential and proprietary employer information are excluded from the definition of a non-compete, and “proprietary employer information” expressly includes customer and client lists. That is a different theory from a non-compete and is generally the stronger one.
We are buying a company — can we still restrict the seller?
A seller’s covenant contained in, or executed contemporaneously with, the sale agreement is excluded from the definition under § 32–581.01(15)(A).
Does the employee have to work in DC?
The “covered employee” definition turns on DC work time — broadly, spending more than 50% of work time for the employer in the District, or being based in the District. Read § 32–581.01 for the full text.
Why does the employee’s compensation decide the answer?
Because the ban is written around it. D.C. Code § 32–581.01 defines a covered employee as one who is not a highly compensated employee, and a highly compensated employee as one whose compensation is at or above the minimum qualifying annual compensation — above that line the prohibition in § 32–581.02(a) does not apply.
When must an employer hand over the written terms?
Within 30 days. D.C. Code § 32–581.03a requires the employer to provide a written copy of a non-compete provision within 30 days of the employee’s acceptance, and again whenever the provision changes, with a separate notice obligation for a highly compensated employee.
Where can a covered employee’s non-compete be enforced?
Nowhere, as a covered employee’s non-compete. D.C. Code § 32–581.02(a) makes such a provision void as a matter of law and unenforceable from October 1, 2022, and § 32–581.04 treats attempting to enforce an invalid non-compete as a violation carrying its own penalty.
How should an employer bring existing agreements into line?
By separating what the Act bans from what it leaves alone, then documenting the change under § 32–581.03a, which requires a written copy whenever a provision changes. The anti-retaliation rule in § 32–581.02(b) means the review has to happen without pressure on the employees affected.
Sources and legal authorities
- D.C. Code § 32–581.01 — Definitions
- D.C. Code § 32–581.02 — Prohibition on non-compete provisions for covered employees
- D.C. Code § 32–581.03 — Limitations for highly compensated employees
- D.C. Code § 32–581.04 — Relief and penalties
- D.C. Code § 36–401 — Trade secrets, definitions
General information about D.C. law, not legal advice. The compensation threshold is adjusted annually — confirm the figure for the relevant year.
Related: Unfair Competition · Non-Solicitation Disputes · NDA / Confidentiality Disputes · Trade Secret Misappropriation · Business Litigation. Call (301) 901-3109 or use the contact page.