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DC Noncompete Rules


NEW IN 2021:

  • District of Columbia’s Sweeping Ban on Non-Competes (noting that "The projected date for the Act to become law is March 19, 2021. Then, in all likelihood, the Act will go into effect in the fall of 2021 once the DC Council tees up a fiscal impact statement and funding for the Act after the next budget cycle").


BEFORE NEW 2021 LAW:

General Rule: Noncompetes are enforceable if reasonable restraint, only necessary to protect employer's legitimate business interest, and no violation of public policy.  Deutsch v. Barsky, 795 A.2d 669 (DC 2002).

Blue Pencil?  Ellis v. James V. Hurson Assoc., 565 A. 2d 615 (DC, 1989) - DC Court of Appeals upholds partial enforcement of preliminary injunction, because severable contract terms. 

Choice of Law. DC courts will enforce the choice of the parties if there is a substantial relationship between them and the designated state law - see L.G. Balfour Co. v McGinnis, 759 F Supp 840 (DDC 1991); NRM Corp v Hercules, Inc., 758 F 2d 676 (DC Cir. 1984). 

Consideration.  Offer of employment is sufficient, but non-compete introduced after employment requires new consideration other than continued employment. Assurance of 10 years of future employment was sufficient consideration - Ellis v. James V. Hurson Assoc., 565 A. 2d 615 (DC, 1989).

Duration.  There is DC precedent to enforce noncompetes for up to three years post-employment. Ellis v. James V. Hurson Assoc., 565 A. 2d 615 (DC, 1989).

Reasonableness - "totality of circumstances" governs - Deutsch v. Barsky, 795 A.2d 669 (DC 2002).

Remedies. Preliminary injunction requires the moving party to show the following, per Jacksonville Port Authority v. Adams, 556 F. 2d 52 (DC Cir. 1977):

  • likely to prevail on merits;
  • irreparable harm without injunction;
  • employer's hardship without injunction worse than employee's hardship with injunction; and
  • public policy favors employer.