open-agreements 0.7.6 → 0.8.0

package/skills/legal-explainers/non-compete-contract-explainer/content/delaware.md

@@ -0,0 +1,222 @@
+---
+jurisdiction: "Delaware"
+slug: delaware
+countryCode: US
+snapshotAsOf: "2026-06-19"
+lastReviewed: "2026-06-02"
+canonicalUrl: https://openagreements.org/practice-guides/non-compete/us/delaware
+license: CC BY 4.0
+stale: false
+---
+
+> [!IMPORTANT]
+> **Informational only — not legal advice.** This is a snapshot of an OpenAgreements practice note,
+> provided for general information. It is not legal advice, does not create an attorney-client
+> relationship, and is not a substitute for a licensed attorney in the relevant jurisdiction.
+> Laws change; verify against the canonical version before relying on it.
+>
+> **Canonical:** https://openagreements.org/practice-guides/non-compete/us/delaware · **Snapshot as of:** 2026-06-19 · License: CC BY 4.0 · © openagreements.org
+
+# Non-Competes in Delaware[^about]
+
+Delaware enforces reasonable non-competes under Court of Chancery and Supreme Court case law, but modern decisions refuse to blue-pencil overbroad covenants and must be read with the physician ban and choice-of-law statute.
+
+
+## At a glance
+
+| Question | Delaware |
+| --- | --- |
+| **Are non-competes enforceable?** | Allowed if reasonable |
+| **Bottom line** | Delaware enforces reasonable non-competes under Chancery/Supreme Court case law but increasingly refuses to blue-pencil overbroad ones, and physician practice-restricting covenants are void by statute. |
+| **Main law or case** | common law (FP UC Holdings, LLC v. Hamilton, 2020 (Del. Ch.)); physician ban 6 Del. C. § 2707 |
+| **Main exceptions** | Physician practice covenants void (§ 2707); home-inspector trainees; sale-of-business reviewed less searchingly |
+| **Can a court narrow it?** | No |
+| **Applies to contractors?** | Unclear |
+| **Restriction extended during a breach?** | Not addressed |
+| **Maximum length set by law** | No statutory limit |
+
+## Are employee non-compete agreements enforceable in Delaware? {#employee-noncompetes}
+
+**Short answer.** Yes, if the covenant is reasonable, protects a legitimate economic interest, and survives the equities. Delaware courts do not mechanically enforce non-competes [^fp-uc-reasonableness-test].
+
+Delaware has no general wage-threshold, notice, or garden-leave statute for ordinary employee non-competes. The baseline rule is common law. The covenant must meet contract-law requirements, fit the protected business interest, and avoid imposing unusual hardship or an unreasonable restraint on trade [^fp-uc-reasonableness-test][^sunder-chancery-holistic-review].
+
+The practical posture is pro-enforcement only for disciplined drafting. A Delaware choice of law clause, executive status, or equity grant does not replace the reasonableness inquiry for a true restraint on post-employment competition.
+
+## What makes a Delaware non-compete reasonable? {#reasonableness-test}
+
+**Short answer.** Delaware looks at the covenant's time, geography, activity scope, protected interest, consideration, and equitable effect together. A covenant should be no broader than the business interest it protects [^payscale-legitimate-interests].
+
+Recognized interests include employer goodwill and confidential information. In *Payscale*, the Delaware Supreme Court held at the pleading stage that an eighteen-month nationwide restriction could proceed where Payscale pleaded a nationwide business, high-value customer relationships, and confidential compensation-data strategy [^payscale-legitimate-interests][^payscale-specific-interests-pleaded].
+
+That is not a safe harbor for nationwide clauses. It is a procedural and factual point: broad scope may be supportable when the pleaded business reality is equally broad, but Delaware still requires tailoring. Surviving a motion to dismiss is not a ruling that the covenant is reasonable; it means only that the complaint pleaded enough to proceed past the pleading stage.
+
+## Will a Delaware court narrow or blue-pencil an overbroad non-compete? {#court-narrowing}
+
+**Short answer.** Usually not as a litigation strategy. Delaware courts retain equitable discretion, but recent Chancery and Supreme Court decisions warn that overbroad covenants may fall rather than be rewritten [^sunder-supreme-blue-pencil-discretion].
+
+The modern no-blue-pencil spine comes from *Kodiak*, *Intertek*, and *Sunder*. The reason is incentive-based: if courts routinely trim overbroad restrictions, employers can draft broadly, chill workers, and still get a lawful restraint if challenged [^kodiak-blue-pencil-inequity][^intertek-no-rescue][^sunder-supreme-perverse-incentives]. For a clause-by-clause pass over a specific agreement against these drafting rules, the [Delaware non-compete review checklist](/checklists/non-compete/us/delaware) walks the full covenant suite item by item with each requirement's force level.
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> Do not draft a Delaware covenant on the assumption that a court will narrow it later. Put the actual enforceable scope in the contract: protected business, restricted activities, customer set, geography, and duration [^sunder-supreme-blue-pencil-discretion][^intertek-no-rescue].
+
+## How does Delaware treat sale-of-business non-competes? {#sale-of-business}
+
+**Short answer.** Delaware gives sale-of-business covenants a less searching review than ordinary employment covenants, but the restraint still must match the goodwill and competitive space bought in the deal [^derge-sale-less-searching].
+
+*Kodiak* is the cautionary example. The buyer acquired Northwest, but the covenant also protected unrelated Kodiak business segments and affiliates. The Court of Chancery refused preliminary enforcement because the restraint exceeded the interest purchased in the transaction [^kodiak-goodwill-limit].
+
+*Derge* shows the other side. The Court of Chancery enforced a five-year sale-linked covenant against a C-suite executive who received nearly one million dollars in merger consideration and had operational knowledge across the acquired business [^derge-substantial-consideration][^derge-reasonable-sale-scope].
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> In a Delaware M&A covenant, define the restricted business by the acquired business and the goodwill actually purchased. Do not use buyer-family affiliate language to protect unrelated legacy businesses unless the record supports that scope [^kodiak-goodwill-limit].
+
+## Are equity-forfeiture or forfeiture-for-competition provisions enforceable in Delaware? {#forfeiture-for-competition}
+
+**Short answer.** Yes — and not only in the limited-partnership setting. Delaware treats a forfeiture-for-competition provision as a condition on a deferred benefit rather than an injunction-backed restraint, and reviews it under the employee-choice doctrine instead of the ordinary reasonableness test [^ainslie-condition-precedent].
+
+The distinction matters. A true non-compete restrains work and is reviewed for reasonableness. A forfeiture-for-competition provision can let the former partner compete while losing a contingent benefit. In that setting, the Delaware Supreme Court held that public policy favored enforcing the limited partnership agreement against sophisticated parties [^ainslie-employee-choice-distinction][^ainslie-summary-rule].
+
+*Ainslie* itself arose from a limited-partnership agreement, but the doctrine is not confined to that setting. In *LKQ Corp. v. Rutledge*, the Delaware Supreme Court advised the Seventh Circuit that *Ainslie* is not restricted to the limited-partnership context, extending the employee-choice doctrine to a corporate restricted-stock-unit forfeiture-for-competition provision [^lkq-not-limited-to-lp].
+
+Do not overread the doctrine. It governs forfeiture conditions on deferred benefits such as partnership distributions or equity awards; it does not let an employer relabel a covenant that directly bars work and thereby escape the reasonableness review that still governs true restraints on post-employment competition.
+
+## What consideration is required for a Delaware non-compete? {#consideration}
+
+**Short answer.** Delaware can treat continued at-will employment as sufficient consideration when signing is a condition of continued employment, and the Delaware Supreme Court measures consideration at contract formation rather than enforcement [^powell-continued-employment][^doorly-formation-timing].
+
+*Powell* upheld a restrictive covenant where the employee was told he would lose the position if he did not sign. *Doorly* later addressed equity-linked covenants and reversed dismissal where the Court of Chancery had evaluated consideration after the employee forfeited incentive units [^powell-condition-employment][^doorly-not-reevaluated].
+
+Consideration is not the whole analysis. A covenant supported by employment, promotion, cash, or equity still must satisfy the Delaware reasonableness test if it restrains post-employment competition. *Doorly* fixes whether consideration *exists* at formation, but the *adequacy* of that consideration is not irrelevant — the balancing of the equities still lets a court weigh how much the employee actually received against the breadth of the restraint [^payscale-adequacy-equities].
+
+## Are physician non-competes allowed in Delaware? {#physician-noncompetes}
+
+**Short answer.** No, not if the covenant restricts a physician's right to practice medicine by place or time after termination. Delaware Code § 2707 makes that type of physician non-compete void [^delaware-physician-void].
+
+The statute is targeted. It applies to physician covenants in employment, partnership, or corporate agreements, and it leaves other agreement provisions enforceable. It also permits damages provisions if the amount is reasonably related to injury from termination, including damages related to competition [^delaware-physician-damages].
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> For Delaware physician agreements, separate any damages clause from a prohibited practice restriction and tie the damages amount to actual injury. Section 2707 voids the locale-or-time restraint but preserves reasonably related damages provisions [^delaware-physician-void][^delaware-physician-damages].
+
+## Can a contract choose Delaware law to govern a non-compete? {#delaware-choice-of-law}
+
+**Short answer.** Often yes for qualifying contracts, but not absolutely. Section 2708 supports Delaware choice-of-law clauses, while Delaware conflict-of-law decisions can still defer to another state's fundamental non-compete policy [^delaware-choice-law-statute][^ascension-public-policy-limit].
+
+Section 2708 creates a strong Delaware-law anchor when the written contract selects Delaware law and the parties are subject to Delaware jurisdiction and service. The statute excludes contracts involving less than $100,000 [^delaware-choice-law-threshold].
+
+But *Ascension* refused to let Delaware's contractarian policy automatically override California's statutory policy for a California employee and California-centered performance. *FP UC Holdings* applied the same Restatement-style framework when Alabama had the stronger interest in an Alabama non-compete issue [^ascension-public-policy-limit][^fp-uc-choice-law-limit].
+
+> [!NOTE]
+> **Practice note.**
+>
+> A Delaware choice-of-law clause is not a universal workaround for another state's non-compete restrictions. Before enforcing against an out-of-state worker, analyze the default state, its fundamental policy, and whether it has a materially greater interest in the specific covenant [^ascension-public-policy-limit][^fp-uc-choice-law-limit].
+
+## How do trade-secret and confidentiality protections fit in? {#trade-secrets-confidentiality}
+
+**Short answer.** DUTSA gives Delaware employers targeted trade-secret remedies that can substitute for, or sit beside, a narrower covenant package. It protects information that has independent economic value from secrecy and is subject to reasonable secrecy efforts [^dutsa-trade-secret-definition].
+
+DUTSA authorizes injunctions for actual or threatened misappropriation, damages for actual loss and unjust enrichment, exemplary damages for wilful and malicious misappropriation, and fee shifting in specified bad-faith or wilful-and-malicious cases [^dutsa-injunctive-relief][^dutsa-damages][^dutsa-fees].
+
+It also preserves contract remedies, whether or not based on trade-secret misappropriation. That matters for confidentiality clauses, but a confidentiality clause should still be drafted around actual confidential information rather than as an indefinite non-compete by another name [^dutsa-contract-remedies].
+
+## Are there other Delaware statutory non-compete limits? {#home-inspector-trainees}
+
+**Short answer.** Yes. Delaware separately protects home inspector trainees: a trainee cannot be required to sign a non-compete with a supervising licensed home inspector as a condition of satisfying trainee requirements [^home-inspector-trainee-ban].
+
+This is a narrow licensing rule, not a general employee non-compete statute. It should be included in profession-specific reviews, especially for inspection businesses and trainee-supervision arrangements.
+
+## What are the key recent developments in Delaware non-compete law? {#recent-developments}
+
+**Short answer.** From 2024 through 2026, the Delaware Supreme Court issued a run of restrictive-covenant decisions spanning the employee-choice doctrine, blue-pencil discretion, consideration timing, and pleading-stage treatment of broad employee covenants [^ainslie-recent-track][^lkq-recent-track][^sunder-recent-track][^doorly-recent-track][^payscale-recent-track].
+
+- 
+- 
+- 
+- 
+- 
+
+The through-line is not that Delaware became anti-enforcement. It is that Delaware separates contract forms carefully and demands fact-specific tailoring before enforcing true restraints on work.
+
+[^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org). Last reviewed 2026-06-02. License: CC BY 4.0. Steven Obiajulu, J.D. is admitted in New York, not Delaware. This article synthesizes Delaware primary law and is not legal advice from a Delaware-admitted attorney. This article is for informational purposes only and does not create an attorney-client relationship.
+
+[^fp-uc-reasonableness-test]: **FP UC Holdings, LLC v. Hamilton** — "Instead, our courts carefully review the covenants to assure they ‘(1) [are] reasonable in geographic scope and temporal duration, (2) advance a legitimate economic interest of the party seeking its enforcement, and (3) survive a balancing of the equities.’" *FP UC Holdings, LLC v. Hamilton, 2020 WL 1492783, at *6 (Del. Ch. Mar. 27, 2020).* <https://www.courtlistener.com/opinion/4739986/fp-uc-holdings-llc-fpmcm-llc-and-fast-pace-medical-clinic-pllc-v/#:~:text=Instead%2C%20our%20courts%20carefully%20review,a%20balancing%20of%20the%20equities.%E2%80%9D>
+
+[^sunder-chancery-holistic-review]: **Sunder Energy, LLC v. Jackson** — "When evaluating the reasonableness of a restrictive covenant, a court examines the restriction holistically and in context. That means evaluating all of the dimensions of the restrictive covenant and considering how it operates with other restrictions in the contract." *Sunder Energy, LLC v. Jackson, 305 A.3d 723, 754 (Del. Ch. 2023), aff'd in relevant part, 332 A.3d 472 (Del. 2024).* <https://www.courtlistener.com/opinion/9444424/sunder-energy-llc-v-jackson/#:~:text=When%20evaluating%20the%20reasonableness%20of,other%20restrictions%20in%20the%20contract.>
+
+[^payscale-legitimate-interests]: **Payscale Inc. v. Norman** — "For a restrictive covenant, ‘‘[l]egitimate interests’ recognized by Delaware law include protection of employer goodwill[] and protection of employer confidential information from misuse.’" *Payscale Inc. v. Norman, No. 297, 2025, slip op. at 15-16 (Del. Mar. 19, 2026).* <https://www.courtlistener.com/opinion/10811247/payscale-inc-v-erin-norman-and-bettercomp-inc/#:~:text=For%20a%20restrictive%20covenant%2C%20%E2%80%9C%E2%80%98%5Bl%5Degitimate,employer%20confidential%20information%20from%20misuse.%E2%80%9D>
+
+[^payscale-specific-interests-pleaded]: **Payscale Inc. v. Norman** — "Payscale alleges that the non-compete’s terms are directly tied to protecting specific contracts with its most valued customers; at the pleadings stage, it is reasonable to infer that protecting relationships with these key customers is in Payscale’s ‘particularly strong economic interest.’" *Payscale Inc. v. Norman, No. 297, 2025, slip op. at 18 (Del. Mar. 19, 2026).* <https://www.courtlistener.com/opinion/10811247/payscale-inc-v-erin-norman-and-bettercomp-inc/#:~:text=Payscale%20alleges%20that%20the%20non%2Dcompete%E2%80%99s,Payscale%E2%80%99s%20%E2%80%9Cparticularly%20strong%20economic%20interest.%E2%80%9D>
+
+[^sunder-supreme-blue-pencil-discretion]: **Sunder Energy, LLC v. Jackson** — "This is not to say that Delaware courts should never blue pencil an agreement that is overbroad in some respects. But the relief Appellant sought was a wholesale reformation of the parties’ agreement." *Sunder Energy, LLC v. Jackson, 332 A.3d 472, 495 (Del. 2024).* <https://www.courtlistener.com/opinion/10291288/sunder-energy-llc-v-tyler-jackson/#:~:text=This%20is%20not%20to%20say,reformation%20of%20the%20parties%E2%80%99%20agreement.>
+
+[^kodiak-blue-pencil-inequity]: **Kodiak Building Partners, LLC v. Adams** — "The inequities inherent in blue-penciling a noncompete also counsel against enforcing only those portions of the RCA that are supported by Kodiak’s legitimate business interests, even as Adams appears to have violated those portions." *Kodiak Bldg. Partners, LLC v. Adams, 2022 WL 5240507, at *13 n.108 (Del. Ch. Oct. 6, 2022).* <https://www.courtlistener.com/opinion/8247185/kodiak-building-partners-llc-v-philip-d-adams/#:~:text=The%20inequities%20inherent%20in%20blue%2Dpenciling,to%20have%20violated%20those%20portions.>
+
+[^intertek-no-rescue]: **Intertek Testing Services NA, Inc. v. Eastman** — "In my view, revising the non-compete to save Intertek—a sophisticated party—from its overreach would be inequitable." *Intertek Testing Servs. NA, Inc. v. Eastman, 2023 WL 2544236, at *5 (Del. Ch. Mar. 16, 2023).* <https://www.courtlistener.com/opinion/9384707/intertek-testing-services-na-inc-v-jeff-eastman/#:~:text=In%20my%20view%2C%20revising%20the,its%20overreach%20would%20be%20inequitable.>
+
+[^sunder-supreme-perverse-incentives]: **Sunder Energy, LLC v. Jackson** — "This argument, however, turns the analysis on its head and creates perverse incentives for employers drafting restrictive covenants. If employers know that even the most unreasonable covenants will be enforced if an employee’s conduct is sufficiently flagrant, employers will be less incentivized to craft reasonable restrictions from the outset." *Sunder Energy, LLC v. Jackson, 332 A.3d 472, 495 (Del. 2024).* <https://www.courtlistener.com/opinion/10291288/sunder-energy-llc-v-tyler-jackson/#:~:text=This%20argument%2C%20however%2C%20turns%20the,reasonable%20restrictions%20from%20the%20outset.>
+
+[^derge-sale-less-searching]: **Derge v. D&H United Fueling Solutions, Inc.** — "By comparison, ‘covenants not to compete in the context of a business sale are subject to a ‘less searching’ inquiry than if the covenant ‘had been contained in an employment contract.’’" *Derge v. D&H United Fueling Sols., Inc., C.A. No. 2025-0087-BWD, slip op. at 12 (Del. Ch. Dec. 8, 2025).* <https://www.courtlistener.com/opinion/10749078/william-brian-derge-v-dh-united-fueling-solutions-inc/#:~:text=By%20comparison%2C%20%E2%80%9Ccovenants%20not%20to,contained%20in%20an%20employment%20contract.%E2%80%99%E2%80%9D>
+
+[^kodiak-goodwill-limit]: **Kodiak Building Partners, LLC v. Adams** — "In sum, Kodiak has a legitimate business interest in protecting the goodwill it purchased when it bought Northwest, and the confidential information about Kodiak operations that Adams knows or could access." *Kodiak Bldg. Partners, LLC v. Adams, 2022 WL 5240507, at *8 (Del. Ch. Oct. 6, 2022).* <https://www.courtlistener.com/opinion/8247185/kodiak-building-partners-llc-v-philip-d-adams/#:~:text=In%20sum%2C%20Kodiak%20has%20a,Adams%20knows%20or%20could%20access.>
+
+[^derge-substantial-consideration]: **Derge v. D&H United Fueling Solutions, Inc.** — "Plaintiff received substantial consideration—nearly $1 million—in a Merger that was conditioned on his agreement to the Non-Compete." *Derge v. D&H United Fueling Sols., Inc., C.A. No. 2025-0087-BWD, slip op. at 16-17 (Del. Ch. Dec. 8, 2025).* <https://www.courtlistener.com/opinion/10749078/william-brian-derge-v-dh-united-fueling-solutions-inc/#:~:text=Plaintiff%20received%20substantial%20consideration,conditioned%20on%20his%20agreement%20to%20the%20Non%2DCompete.>
+
+[^derge-reasonable-sale-scope]: **Derge v. D&H United Fueling Solutions, Inc.** — "The record here shows that Tanknology conducted business across the United States and internationally, and that, as COO, Plaintiff had responsibility over operations across all markets. Thus, Defendants have a legitimate business interest in the Protected Area." *Derge v. D&H United Fueling Sols., Inc., C.A. No. 2025-0087-BWD, slip op. at 19 (Del. Ch. Dec. 8, 2025).* <https://www.courtlistener.com/opinion/10749078/william-brian-derge-v-dh-united-fueling-solutions-inc/#:~:text=The%20record%20here%20shows%20that,interest%20in%20the%20Protected%20Area.>
+
+[^ainslie-condition-precedent]: **Cantor Fitzgerald, L.P. v. Ainslie** — "It found, instead, that the Competitive Activity Condition was a condition precedent to Cantor Fitzgerald’s duty to pay the Conditioned Amounts. We agree with that conclusion, and the Plaintiffs do not contest it on appeal." *Cantor Fitzgerald, L.P. v. Ainslie, 312 A.3d 674, 690 (Del. 2024).* <https://www.courtlistener.com/opinion/9469727/cantor-fitzgerald-lp-v-ainslie/#:~:text=It%20found%2C%20instead%2C%20that%20the,not%20contest%20it%20on%20appeal.>
+
+[^ainslie-employee-choice-distinction]: **Cantor Fitzgerald, L.P. v. Ainslie** — "Thus, the Competitive Activity Condition does not restrict competition or a former partner’s ability to work; nor does competition support injunctive relief." *Cantor Fitzgerald, L.P. v. Ainslie, 312 A.3d 674, 694 (Del. 2024).* <https://www.courtlistener.com/opinion/9469727/cantor-fitzgerald-lp-v-ainslie/#:~:text=Thus%2C%20the%20Competitive%20Activity%20Condition,does%20competition%20support%20injunctive%20relief.>
+
+[^ainslie-summary-rule]: **Cantor Fitzgerald, L.P. v. Ainslie** — "To sum up, we disagree with the Court of Chancery’s conclusion that forfeiture-for-competition provisions like the one at issue here are restraints of trade subject to review for reasonableness." *Cantor Fitzgerald, L.P. v. Ainslie, 312 A.3d 674, 700 (Del. 2024).* <https://www.courtlistener.com/opinion/9469727/cantor-fitzgerald-lp-v-ainslie/#:~:text=To%20sum%20up%2C%20we%20disagree,subject%20to%20review%20for%20reasonableness.>
+
+[^lkq-not-limited-to-lp]: **LKQ Corp. v. Rutledge** — "Cantor Fitzgerald is not restricted to the limited partnership context." *LKQ Corp. v. Rutledge, No. 110, 2024 (Del. Dec. 18, 2024).* <https://www.courtlistener.com/opinion/10296559/lkq-corporation-v-robert-rutledge/#:~:text=Cantor%20Fitzgerald%20is%20not%20restricted,to%20the%20limited%20partnership%20context.>
+
+[^powell-continued-employment]: **Research & Trading Corp. v. Powell** — "The Court finds there was sufficient consideration at the time of the signing of the covenant to support an enforceable restrictive covenant." *Research & Trading Corp. v. Powell, 468 A.2d 1301, 1305 (Del. Ch. 1983).* <https://www.courtlistener.com/opinion/2275060/research-trading-corp-v-powell/#:~:text=The%20Court%20finds%20there%20was,support%20an%20enforceable%20restrictive%20covenant.>
+
+[^doorly-formation-timing]: **North American Fire Ultimate Holdings, LP v. Doorly** — "Because consideration is measured at the time of contracting and not at the time of enforcement, we reverse and remand for further proceedings." *N. Am. Fire Ultimate Holdings, LP v. Doorly, No. 142, 2025, order at 2 (Del. Feb. 3, 2026).* <https://www.courtlistener.com/opinion/10783312/north-american-fire-ultimate-holdings-lp-v-alan-doorly/#:~:text=Because%20consideration%20is%20measured%20at,and%20remand%20for%20further%20proceedings.>
+
+[^powell-condition-employment]: **Research & Trading Corp. v. Powell** — "Powell was told he would lose the position if he did not sign." *Research & Trading Corp. v. Powell, 468 A.2d 1301, 1305 (Del. Ch. 1983).* <https://www.courtlistener.com/opinion/2275060/research-trading-corp-v-powell/#:~:text=Powell%20was%20told%20he%20would,if%20he%20did%20not%20sign.>
+
+[^doorly-not-reevaluated]: **North American Fire Ultimate Holdings, LP v. Doorly** — "Consideration is measured at the time of formation and is not reevaluated at the time of enforcement." *N. Am. Fire Ultimate Holdings, LP v. Doorly, No. 142, 2025, order at 6 (Del. Feb. 3, 2026).* <https://www.courtlistener.com/opinion/10783312/north-american-fire-ultimate-holdings-lp-v-alan-doorly/#:~:text=Consideration%20is%20measured%20at%20the%20time%20of%20formation,at%20the%20time%20of%20enforcement.>
+
+[^payscale-adequacy-equities]: **Payscale Inc. v. Norman** — "That is not to suggest that the adequacy of consideration is irrelevant in the context of restrictive covenants; the balancing-of-the-equities inquiry affords the court discretion to weigh the breadth of a restrictive covenant against the consideration that supports it." *Payscale Inc. v. Norman, No. 297, 2025, slip op. at 17 (Del. Mar. 19, 2026).* <https://www.courtlistener.com/opinion/10811247/payscale-inc-v-erin-norman-and-bettercomp-inc/#:~:text=That%20is%20not%20to%20suggest,the%20consideration%20that%20supports%20it.>
+
+[^delaware-physician-void]: **6 Del. C. § 2707** — "Any covenant not to compete provision of an employment, partnership or corporate agreement between and/or among physicians which restricts the right of a physician to practice medicine in a particular locale and/or for a defined period of time, upon the termination of the principal agreement of which the said provision is a part, shall be void; except that all other provisions of such an agreement shall be enforceable at law, including provisions which require the payment of damages in an amount that is reasonably related to the injury suffered by reason of termination of the principal agreement." *6 Del. C. § 2707.* <https://delcode.delaware.gov/title6/c027/sc01/index.html>
+
+[^delaware-physician-damages]: **6 Del. C. § 2707** — "Provisions which require the payment of damages upon termination of the principal agreement may include, but not be limited to, damages related to competition." *6 Del. C. § 2707.* <https://delcode.delaware.gov/title6/c027/sc01/index.html>
+
+[^delaware-choice-law-statute]: **6 Del. C. § 2708** — "The foregoing shall conclusively be presumed to be a significant, material and reasonable relationship with this State and shall be enforced whether or not there are other relationships with this State." *6 Del. C. § 2708(a).* <https://delcode.delaware.gov/title6/c027/sc01/index.html>
+
+[^ascension-public-policy-limit]: **Ascension Insurance Holdings, LLC v. Underwood** — "I cannot agree with the Plaintiff, however, that the teaching of DGWL is that Delaware’s broad interest in freedom of contract will always, or even routinely, trump the default state’s public policy." *Ascension Ins. Holdings, LLC v. Underwood, 2015 WL 356002, at *5 (Del. Ch. Jan. 28, 2015).* <https://www.courtlistener.com/opinion/2774269/ascension-insurance-holdings-llc-v-roberts-f-under/#:~:text=I%20cannot%20agree%20with%20the,the%20default%20state%E2%80%99s%20public%20policy.>
+
+[^delaware-choice-law-threshold]: **6 Del. C. § 2708** — "This section shall not apply to any contract, agreement or other undertaking: (1) To the extent provided to the contrary in § 1-301(c) of this title; or (2) Involving less than $100,000." *6 Del. C. § 2708(c).* <https://delcode.delaware.gov/title6/c027/sc01/index.html>
+
+[^fp-uc-choice-law-limit]: **FP UC Holdings, LLC v. Hamilton** — "If these narrow ‘questions are answered in the affirmative, [Alabama] law will apply notwithstanding the choice-of-law provision.’" *FP UC Holdings, LLC v. Hamilton, 2020 WL 1492783, at *10 (Del. Ch. Mar. 27, 2020).* <https://www.courtlistener.com/opinion/4739986/fp-uc-holdings-llc-fpmcm-llc-and-fast-pace-medical-clinic-pllc-v/#:~:text=If%20these%20narrow%20%E2%80%9Cquestions%20are,apply%20notwithstanding%20the%20choice%2Dof%2Dlaw%20provision.%E2%80%9D>
+
+[^dutsa-trade-secret-definition]: **6 Del. C. § 2001** — "‘Trade secret’ shall mean information, including a formula, pattern, compilation, program, device, method, technique or process, that: a. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy." *6 Del. C. § 2001(4).* <https://delcode.delaware.gov/title6/c020/index.html>
+
+[^dutsa-injunctive-relief]: **6 Del. C. § 2002** — "(a) Actual or threatened misappropriation may be enjoined." *6 Del. C. § 2002(a).* <https://delcode.delaware.gov/title6/c020/index.html>
+
+[^dutsa-damages]: **6 Del. C. § 2003** — "Damages can include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss." *6 Del. C. § 2003(a).* <https://delcode.delaware.gov/title6/c020/index.html>
+
+[^dutsa-fees]: **6 Del. C. § 2004** — "If a claim of misappropriation is made in bad faith, a motion to terminate an injunction is made or resisted in bad faith, or wilful and malicious misappropriation exists, the court may award reasonable attorney’s fees to the prevailing party." *6 Del. C. § 2004.* <https://delcode.delaware.gov/title6/c020/index.html>
+
+[^dutsa-contract-remedies]: **6 Del. C. § 2007** — "(1) Contractual remedies, whether or not based upon misappropriation of a trade secret;" *6 Del. C. § 2007(b)(1).* <https://delcode.delaware.gov/title6/c020/index.html>
+
+[^home-inspector-trainee-ban]: **24 Del. C. § 4109(d)** — "(d) No person, while registered as a home inspector trainee, shall be required to pay any fee, charge or other thing of value to a supervising licensed home inspector, or be required to execute a covenant not to compete with a supervising licensed home inspector, as a condition of satisfying the home inspector trainee requirements of this subchapter." *24 Del. C. § 4109(d).* <https://delcode.delaware.gov/title24/c041/sc02/index.html>
+
+[^ainslie-recent-track]: **Cantor Fitzgerald, L.P. v. Ainslie** — "Thus, the Competitive Activity Condition does not restrict competition or a former partner’s ability to work; nor does competition support injunctive relief." *Cantor Fitzgerald, L.P. v. Ainslie, 312 A.3d 674, 695 (Del. 2024).* <https://www.courtlistener.com/opinion/9469727/cantor-fitzgerald-lp-v-ainslie/#:~:text=Thus%2C%20the%20Competitive%20Activity%20Condition,does%20competition%20support%20injunctive%20relief.>
+
+[^lkq-recent-track]: **LKQ Corp. v. Rutledge** — "Cantor Fitzgerald is not restricted to the limited partnership context." *LKQ Corp. v. Rutledge, No. 110, 2024 (Del. Dec. 18, 2024).* <https://www.courtlistener.com/opinion/10296559/lkq-corporation-v-robert-rutledge/#:~:text=Cantor%20Fitzgerald%20is%20not%20restricted,to%20the%20limited%20partnership%20context.>
+
+[^sunder-recent-track]: **Sunder Energy, LLC v. Jackson** — "The Court of Chancery was well within its discretion to apply that precedent and refuse to blue pencil the covenants." *Sunder Energy, LLC v. Jackson, 332 A.3d 472, 492 (Del. 2024).* <https://www.courtlistener.com/opinion/10291288/sunder-energy-llc-v-tyler-jackson/#:~:text=The%20Court%20of%20Chancery%20was,to%20blue%20pencil%20the%20covenants.>
+
+[^doorly-recent-track]: **North American Fire Ultimate Holdings, LP v. Doorly** — "Because consideration is measured at the time of contracting and not at the time of enforcement, we reverse and remand for further proceedings." *N. Am. Fire Ultimate Holdings, LP v. Doorly, No. 142, 2025, order at 2 (Del. Feb. 3, 2026).* <https://www.courtlistener.com/opinion/10783312/north-american-fire-ultimate-holdings-lp-v-alan-doorly/#:~:text=Because%20consideration%20is%20measured%20at,and%20remand%20for%20further%20proceedings.>
+
+[^payscale-recent-track]: **Payscale Inc. v. Norman** — "Accordingly, the trial court erred in dismissing Payscale’s claim that Norman breached the non-compete provision." *Payscale Inc. v. Norman, No. 297, 2025, slip op. at 18 (Del. Mar. 19, 2026).* <https://www.courtlistener.com/opinion/10811247/payscale-inc-v-erin-norman-and-bettercomp-inc/#:~:text=Accordingly%2C%20the%20trial%20court%20erred,Norman%20breached%20the%20non%2Dcompete%20provision.>

package/skills/legal-explainers/non-compete-contract-explainer/content/district-of-columbia.md

@@ -0,0 +1,263 @@
+---
+jurisdiction: "District of Columbia"
+slug: district-of-columbia
+countryCode: US
+snapshotAsOf: "2026-06-19"
+lastReviewed: "2026-06-03"
+canonicalUrl: https://openagreements.org/practice-guides/non-compete/us/district-of-columbia
+license: CC BY 4.0
+stale: false
+---
+
+> [!IMPORTANT]
+> **Informational only — not legal advice.** This is a snapshot of an OpenAgreements practice note,
+> provided for general information. It is not legal advice, does not create an attorney-client
+> relationship, and is not a substitute for a licensed attorney in the relevant jurisdiction.
+> Laws change; verify against the canonical version before relying on it.
+>
+> **Canonical:** https://openagreements.org/practice-guides/non-compete/us/district-of-columbia · **Snapshot as of:** 2026-06-19 · License: CC BY 4.0 · © openagreements.org
+
+# Non-Competes in the District of Columbia[^about]
+
+The District of Columbia bans non-compete provisions for most employees and allows them only for highly compensated employees who earn above an annually adjusted threshold and sign a covenant that meets strict scope, duration, and notice requirements.
+
+
+## At a glance
+
+| Question | District of Columbia |
+| --- | --- |
+| **Are non-competes enforceable?** | Allowed above a pay level |
+| **Bottom line** | The District bans non-competes for most employees and permits them only for highly compensated employees (above an annually adjusted pay floor) whose covenant meets strict scope, duration, and 14-day notice requirements. |
+| **Main law or case** | D.C. Code § 32-581.02 (Ban on Non-Compete Agreements Amendment Act of 2020) |
+| **Main exceptions** | Highly compensated employees above the pay threshold ($162,164 in 2026); medical specialists ($270,274 in 2026, 730-day cap); sale-of-business; confidentiality/long-term-incentive carve-outs; broadcast employees cannot be bound; pre-Oct 1, 2022 agreements under common law |
+| **When the ban took effect** | October 1, 2022 |
+| **Can a court narrow it?** | Yes — rewrites to reasonable |
+| **Applies to contractors?** | Unclear |
+| **Restriction extended during a breach?** | Open question — caps run as fixed days from separation |
+| **Maximum length set by law** | 365 days (non-medical highly compensated employee); 730 days (medical specialist) |
+
+## Are employee non-compete agreements enforceable in the District of Columbia? {#enforceability}
+
+**Short answer.** Usually no. Since October 1, 2022, a District employer may not require or request that a *covered employee* — broadly, most employees who do not meet a high compensation threshold — sign or comply with a non-compete provision, and a non-compete provision in a covered employee's agreement entered into on or after that date is void as a matter of law [^ban-covered][^void-rule].
+
+The governing law is the District's Ban on Non-Compete Agreements Amendment Act of 2020, codified at D.C. Code §§ 32-581.01 through 32-581.05 and operative since October 1, 2022. The prohibition is a flat rule for covered employees, not a reasonableness test [^ban-covered]. A non-compete provision that violates the ban in a covered employee's agreement is void and unenforceable by force of statute [^void-rule].
+
+The District law does leave a path for one group: a *highly compensated employee* may be bound by a non-compete that satisfies the strict scope, duration, and notice requirements described below [^hce-overview].
+
+"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."[^void-rule]
+
+## Who counts as a covered employee protected by the District's non-compete ban? {#covered-employee}
+
+**Short answer.** Most District-based employees who earn below the high compensation threshold. A covered employee is one who is not a highly compensated employee and who either spends more than 50% of work time for the employer in the District, or is District-based and regularly spends a substantial amount of work time in the District and not more than half elsewhere [^covered-definition].
+
+Coverage turns on two things: the District-work test above and compensation. For a non-broadcast employee who meets that work test, compensation is the dividing line — the ban protects everyone below the *minimum qualifying annual compensation*, which the statute set at a base of $150,000 (or $250,000 for a medical specialist) and which is adjusted upward each year for inflation [^min-qualifying-comp][^threshold-2026]. As of January 1, 2026, the District's Department of Employment Services puts the figures at $162,164 for most employees and $270,274 for medical specialists [^threshold-2026].
+
+Coverage also turns on where the work happens, not where the employer is headquartered, so a District-based role can be covered even if the employer is elsewhere [^covered-definition]. The chapter does not, however, override a valid collective bargaining agreement [^cba-carveout].
+
+> [!NOTE]
+> **Practice note.**
+>
+> Do not assume an out-of-District employer escapes the ban. Coverage follows the employee's District work — more than 50% of work time in the District, or a District-based role with substantial District work — so a company anywhere can be subject to the prohibition for a worker based in the District [^covered-definition].
+
+## When can a District of Columbia employer use a non-compete agreement? {#highly-compensated-exception}
+
+**Short answer.** Only with a highly compensated employee, and only if the covenant meets every statutory requirement. A non-compete with a highly compensated employee is valid only if the agreement specifies the functional scope of the restriction and its geographic limits, caps the post-employment term, and is delivered in writing at least 14 days in advance [^hce-requirements][^hce-duration][^hce-notice-timing].
+
+A highly compensated employee is one — other than a broadcast employee — who is reasonably expected to earn, or who earned in the preceding consecutive 12-month period, at or above the minimum qualifying annual compensation [^hce-definition]. Broadcast employees are carved out of that definition, so an on-air or off-air creator for a broadcaster cannot be bound by a non-compete under this exception even at a high salary [^hce-definition][^broadcast-exclusion].
+
+For a qualifying employee, the agreement must do three things to be enforceable: specify the functional scope of the competitive restriction, specify the geographic limits, and cap the post-employment term — 365 calendar days for a non-medical employee [^hce-requirements][^hce-duration]. The employer must also deliver the non-compete provision in writing at least 14 days before the employee starts work, or at least 14 days before a current employee must sign [^hce-notice-timing].
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> A high salary alone does not make a District non-compete enforceable. The agreement must spell out the functional scope and geographic limits, stay within the duration cap, and be delivered at least 14 days in advance — miss any element and the covenant is not valid and enforceable under § 32-581.03(a) [^hce-requirements][^hce-notice-timing].
+
+## How does the District treat non-competes for physicians and medical specialists? {#medical-specialists}
+
+**Short answer.** Medical specialists can be bound, but only above a higher pay floor and for a longer maximum term. A *medical specialist* — a licensed physician who has completed a residency and earns at least $250,000 (as annually adjusted) — may be subject to a non-compete capped at 730 calendar days, double the 365-day cap for other employees [^medical-specialist-def][^medical-duration].
+
+The medical specialist category is narrow: the statute requires a license to practice medicine, status as a physician, a completed medical residency, and total compensation of at least $250,000 before annual inflation adjustments [^medical-specialist-def]. For 2026, the Department of Employment Services sets the medical specialist threshold at $270,274 [^medical-threshold-2026].
+
+A medical specialist's non-compete must still meet all of the other § 32-581.03 requirements — functional scope, geographic limits, and 14-day advance written notice — and only the duration cap differs, at 730 calendar days from separation [^medical-duration][^medical-requirements].
+
+## What notices and disclosures must a District employer provide? {#notice-disclosures}
+
+**Short answer.** A specific statutory notice for proposed non-competes, plus written disclosure of any workplace-policy carve-outs. Whenever an employer proposes a non-compete to a highly compensated employee, it must provide a prescribed statutory notice, and an employer that relies on the policy exceptions to the non-compete definition must give employees a written copy of those provisions on a set timeline [^statutory-notice][^policy-disclosure].
+
+The statutory notice has fixed content: it must tell the employee that the District's Ban on Non-Compete Agreements Amendment Act of 2020 limits non-competes, that the employer has determined the employee to be highly compensated, and that the employee can contact the District of Columbia Department of Employment Services for more information [^statutory-notice]. This notice requirement is separate from, and in addition to, the 14-day advance delivery rule for the non-compete provision itself.
+
+An employer whose workplace policy uses one of the exceptions to the non-compete definition — for example, an anti-moonlighting or conflict-of-interest restriction — must give affected employees a written copy of those provisions within 30 days of acceptance of employment, within 30 days after October 1, 2022, and whenever the policy changes [^policy-disclosure].
+
+> [!NOTE]
+> **Practice note.**
+>
+> Build the disclosures into onboarding. A District employer that proposes a non-compete to a highly compensated employee must hand over the exact statutory notice, and any employer relying on a policy carve-out must distribute the written provisions within 30 days of hire and on every change — a missed disclosure is itself a violation carrying $250-per-employee monetary relief [^statutory-notice][^policy-disclosure][^disclosure-relief].
+
+## Does the District's ban reach workplace policies, not just signed contracts? {#workplace-policies}
+
+**Short answer.** Yes. The ban applies to a non-compete provision in either a written agreement or a *workplace policy*, and a workplace policy includes unwritten rules applied as a matter of practice [^noncompete-definition][^workplace-policy-def].
+
+A *non-compete provision* is defined as 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 [^noncompete-definition]. Because a *workplace policy* reaches rules and restrictions whether written or applied in practice, an employer cannot avoid the ban by moving a competition restriction out of the signed agreement and into a handbook or an informal rule [^workplace-policy-def].
+
+The definition does, however, leave room for a narrow set of during-employment restrictions. An anti-moonlighting or conflict-of-interest limit on outside work for pay is not a banned non-compete provision when the employer reasonably believes the outside work will disclose confidential information, conflict with established conflict-of-interest rules, create a conflict of commitment at a higher education institution, or impair the employer's ability to comply with law or a contract [^outside-work-carveout].
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> A restriction on a current employee's outside work survives only if it fits the statutory carve-out. Tie it to the enumerated risks — confidential information, established conflict-of-interest rules, conflict of commitment at a higher education institution, or a legal or contractual compliance concern — and to a reasonable belief that the risk applies; a broad ban on any outside work risks being treated as a prohibited non-compete provision [^outside-work-carveout].
+
+## Are confidentiality and trade-secret protections still allowed in the District? {#confidentiality-trade-secrets}
+
+**Short answer.** Yes. A provision protecting the employer's confidential or proprietary information is expressly excluded from the non-compete definition, and the District's Uniform Trade Secrets Act gives an independent remedy [^confidentiality-carveout][^utsa-injunction].
+
+The statute carves a confidentiality restriction out of the non-compete definition, so a properly drafted nondisclosure obligation covering the employer's confidential or proprietary information is not a banned non-compete provision [^confidentiality-carveout]. The statute likewise excludes a provision that provides a long-term incentive, so a genuine long-term incentive arrangement — equity, options, or performance awards earned over more than one year — is not treated as a banned non-compete [^lti-carveout]. Separately, the District's Uniform Trade Secrets Act allows a court to enjoin actual or threatened misappropriation of a trade secret, giving employers a protection that does not depend on the non-compete rules at all [^utsa-injunction].
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> Keep a confidentiality clause to genuine confidential and proprietary information. The carve-out protects restrictions on disclosing or using employer information; a nondisclosure clause drafted so broadly that it effectively prevents the employee from working for a competitor risks being recharacterized as a prohibited non-compete provision [^confidentiality-carveout].
+
+## Are sale-of-business non-competes enforceable in the District of Columbia? {#sale-of-business}
+
+**Short answer.** They are not banned by the statute, but their enforceability still turns on common-law reasonableness. A covenant in which the seller of a business agrees not to compete with the buyer is excluded from the non-compete definition, so it is not void under the ban; it remains subject to the District's common-law rule of reason [^sale-carveout][^ellis-reasonableness].
+
+The statute excludes a non-compete contained within or executed contemporaneously with an agreement between the seller and buyer of a business, where the seller agrees not to compete with the buyer's business [^sale-carveout]. Because such a covenant sits outside the statute, the District's pre-existing common law controls its enforceability, and District courts evaluate a restraint of trade against the Restatement's reasonableness principles [^ellis-reasonableness].
+
+"A promise is unenforceable on grounds of public policy if it is unreasonably in restraint of trade."[^ellis-reasonableness]
+
+## What law applies to non-competes signed before October 1, 2022? {#older-agreements-common-law}
+
+**Short answer.** Common-law reasonableness, not the statutory ban. The voiding rule in § 32-581.02 reaches agreements entered into on or after October 1, 2022, so an earlier covenant — and any covenant outside the statute's scope — is governed by the District's common-law rule of reason [^void-rule-retroactivity][^ellis-partial][^cumulative-rule].
+
+Under that common law, a District court asks whether the restraint is reasonable, and it need not treat an overbroad covenant as all-or-nothing: the District has joined the jurisdictions that allow partial enforcement of a covenant only to the extent its terms are reasonable [^ellis-partial]. Courts apply the multi-factor reasonableness inquiry, and a trial court that declares a covenant unreasonable without properly applying those factors can be reversed [^deutsch-factors]. The statute also preserves these common-law rights expressly, providing that its remedies are in addition to and cumulative of the common law [^cumulative-rule].
+
+## Will a District of Columbia court rewrite or narrow an overbroad covenant? {#court-narrowing}
+
+**Short answer.** It can reform a covenant, but only by narrowing — never by broadening. The District of Columbia Court of Appeals has formally adopted the doctrine of equitable reformation to modify an overbroad restrictive covenant, but a court exceeds that doctrine if it expands the restriction beyond the contract's own terms [^steiner-reformation].
+
+In *Steiner v. American Friends of Lubavitch (Chabad)*, the court adopted equitable reformation but vacated an injunction because the trial court had used broader language than the employment contract, effectively enlarging the restraint [^steiner-reformation]. The lesson for drafters is that reformation is a backstop for narrowing, not a license to write an aggressive covenant and rely on a court to fix it.
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> Do not draft an overbroad District covenant expecting a court to rescue it. A court may narrow an unreasonable restraint under *Steiner*, but it may not broaden one beyond the contract's terms, and for a covered or highly compensated employee the statutory rules — not judicial reformation — control whether the covenant is valid at all [^steiner-reformation][^hce-requirements-narrowing].
+
+## What are the penalties for using a banned non-compete in the District? {#penalties-enforcement}
+
+**Short answer.** Administrative penalties plus per-employee monetary relief, and active enforcement by the Attorney General. An employer that violates the ban faces administrative penalties and owes statutory relief to each affected employee — and the District's Office of the Attorney General has pursued and settled non-compete cases [^relief-amounts][^oag-enforcement].
+
+The statute sets graduated monetary relief: an employer that subjects an employee to a banned non-compete owes that employee not less than $500 and not more than $1,000 [^relief-subjecting], an employer that attempts to enforce a void non-compete owes at least $1,500 [^relief-amounts], and subsequent violations carry at least $3,000 per employee [^relief-subsequent]. The Mayor may also assess administrative penalties for each violation [^admin-penalty]. Both the Mayor and the Attorney General enforce the chapter [^enforcement-authority], and a harmed person may also bring a civil action [^private-enforcement].
+
+The chapter also forbids retaliation: an employer may not retaliate or threaten to retaliate against a covered employee for refusing, failing to comply with, or complaining about a banned non-compete, and an employer that retaliates owes each affected employee between $1,000 and $2,500 [^retaliation-ban][^retaliation-relief].
+
+Enforcement is real. In November 2023, the Attorney General announced settlements with three employers and described the ban as making it illegal to impose non-compete agreements on most District workers earning less than $150,000 a year [^oag-enforcement]. The Attorney General has also treated a franchise *no-poach* clause as violating both the ban and the District's Antitrust Act, which declares contracts in restraint of trade illegal [^oag-nopoach][^antitrust]. For a clause-by-clause exposure screen of a specific agreement against these rules, the [District of Columbia non-compete review checklist](/checklists/non-compete/us/district-of-columbia) walks the full covenant suite item by item with each requirement's force level.
+
+> [!NOTE]
+> **Practice note.**
+>
+> The exposure attaches per employee and to attempted enforcement, not just to a lawsuit you lose. Before presenting any District non-compete, confirm the worker is a highly compensated employee, the covenant meets every § 32-581.03 requirement, and the disclosures are made — because subjecting a covered employee to a banned covenant, or trying to enforce a void one, triggers fixed per-employee relief and Attorney General enforcement [^relief-amounts][^oag-enforcement].
+
+## Does a District of Columbia non-compete toll or extend during a breach or litigation? {#tolling-extension}
+
+**Short answer.** This is an open question, and the statute's structure cuts against automatic extension. The District's non-compete statute sets no tolling rule, and its caps run as a fixed number of calendar days measured from separation — language that sits uneasily with extending a highly compensated employee's restricted period during a breach or while litigation is pending [^tolling-duration-cap][^tolling-cumulative].
+
+The duration limits are written as hard caps: a non-medical highly compensated employee's term of non-competition may not exceed 365 calendar days, and a medical specialist's may not exceed 730 calendar days, each measured from the date of separation — not from the end of any breach [^tolling-duration-cap]. A tolling-on-breach clause that pushes enforcement past those caps would be in tension with the statutory ceiling. Because the District has no decision resolving whether a contractual extension survives, the safest reading is that an employer cannot rely on one.
+
+> [!NOTE]
+> **Practice note.**
+>
+> Open question: District law does not say whether a clause extending the restricted period during a breach is enforceable, and the statute caps the term in calendar days measured from separation. Do not assume a District court will toll or extend an expired non-compete, and do not draft a highly compensated employee's covenant in a way that depends on running past the 365-day or 730-day cap [^tolling-duration-cap][^tolling-cumulative].
+
+[^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org). Last reviewed 2026-06-03. License: CC BY 4.0. Steven Obiajulu, J.D. is admitted in New York, not District of Columbia. This article synthesizes District of Columbia primary law and is not legal advice from a District of Columbia-admitted attorney. This article is for informational purposes only and does not create an attorney-client relationship.
+
+[^ban-covered]: **D.C. Code § 32-581.02** — "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." *D.C. Code § 32-581.02(a)(1).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.02>
+
+[^void-rule]: **D.C. Code § 32-581.02** — "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)(2).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.02>
+
+[^hce-overview]: **D.C. Code § 32-581.03** — "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:" *D.C. Code § 32-581.03(a).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.03>
+
+[^covered-definition]: **D.C. Code § 32-581.01** — "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" *D.C. Code § 32-581.01(6)(A).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.01>
+
+[^min-qualifying-comp]: **D.C. Code § 32-581.01** — "Beginning with the calendar year in which this chapter becomes applicable: (i) $150,000; or (ii) $250,000, if the employee is a medical specialist. (B) For the calendar year beginning January 1, 2024, and each calendar year thereafter, an amount equal to the previous calendar year's minimum qualifying annual compensation, increased in proportion to the annual average increase, if any, in the Consumer Price Index for All Urban Consumers in the Washington Metropolitan Statistical Area published by the Bureau of Labor Statistics of the United States Department of Labor for the previous calendar year adjusted to the nearest whole dollar." *D.C. Code § 32-581.01(13).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.01>
+
+[^threshold-2026]: **DOES Public Notice: District of Columbia Prohibition on Non-Compete Clauses (2026)** — "As of January 1, 2026, the restriction on non-compete clauses applies to employees earning less than $162,164 and to medical specialists earning less than $270,274." *D.C. Dep't of Emp't Servs., Office of Wage-Hour, Public Notice: District of Columbia Prohibition on Non-Compete Clauses (Jan. 1, 2026).* <https://does.dc.gov/sites/default/files/dc/sites/does/publication/attachments/2026%20Ban%20on%20Non-Compete%20Clauses_0.pdf>
+
+[^cba-carveout]: **D.C. Code § 32-581.04a** — "Nothing in this chapter shall be interpreted as superseding the terms of a valid collective bargaining agreement." *D.C. Code § 32-581.04a.* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.04a>
+
+[^hce-requirements]: **D.C. Code § 32-581.03** — "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" *D.C. Code § 32-581.03(a)(1).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.03>
+
+[^hce-duration]: **D.C. Code § 32-581.03** — "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" *D.C. Code § 32-581.03(a)(1)(C)(i).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.03>
+
+[^hce-notice-timing]: **D.C. Code § 32-581.03** — "The employer shall provide the non-compete provision to the employee in writing: (A) At least 14 days before the individual commences employment for the employer; or (B) If the employer already employs the highly compensated employee, at least 14 days before the employee must execute the agreement." *D.C. Code § 32-581.03(a)(2).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.03>
+
+[^hce-definition]: **D.C. Code § 32-581.01** — "other than a broadcast employee, an employee: (A) Who is reasonably expected to earn from the employer in a consecutive 12-month period compensation greater than or equal to the minimum qualifying annual compensation; or (B) Whose compensation earned from the employer in the consecutive 12-month period preceding the date on which the proposed term of non-competition is to begin is greater than or equal to the minimum qualifying annual compensation." *D.C. Code § 32-581.01(10).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.01>
+
+[^broadcast-exclusion]: **D.C. Code § 32-581.01** — "‘Broadcast employee’ means an on- or off-air creator (such as an anchor, disc jockey, editor, producer, program host, reporter, or writer) of a legal entity that owns or operates one or more of the following: (A) A television station or network" *D.C. Code § 32-581.01(2).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.01>
+
+[^medical-specialist-def]: **D.C. Code § 32-581.01** — "‘Medical specialist’ means a highly compensated employee who is engaged primarily in the delivery of medical services and who: (A) Holds a license to practice medicine; (B) Is a physician ; (C) Has completed a medical residency; and (D) Receives total compensation in the amount equal to or greater than $ 250,000." *D.C. Code § 32-581.01(12).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.01>
+
+[^medical-duration]: **D.C. Code § 32-581.03** — "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" *D.C. Code § 32-581.03(a)(1)(C)(ii).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.03>
+
+[^medical-threshold-2026]: **DOES Public Notice: District of Columbia Prohibition on Non-Compete Clauses (2026)** — "As of January 1, 2026, the restriction on non-compete clauses applies to employees earning less than $162,164 and to medical specialists earning less than $270,274." *D.C. Dep't of Emp't Servs., Public Notice: District of Columbia Prohibition on Non-Compete Clauses (Jan. 1, 2026).* <https://does.dc.gov/sites/default/files/dc/sites/does/publication/attachments/2026%20Ban%20on%20Non-Compete%20Clauses_0.pdf>
+
+[^medical-requirements]: **D.C. Code § 32-581.03** — "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" *D.C. Code § 32-581.03(a)(1).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.03>
+
+[^statutory-notice]: **D.C. Code § 32-581.03a** — "A highly compensated employee's employer shall provide the following notice to the employee whenever a non-compete provision is proposed to the employee:" *D.C. Code § 32-581.03a(b).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.03a>
+
+[^policy-disclosure]: **D.C. Code § 32-581.03a** — "An employer with a workplace policy that includes one or more of the exceptions to the definition of non-compete provision, as detailed in § 32-581.01(15) , shall provide a written copy of the provisions to an employee: (1) Within 30 days after the employee's acceptance of employment with the employer; (2) Within 30 days after October 1, 2022; and (3) Any time such policy changes." *D.C. Code § 32-581.03a(a).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.03a>
+
+[^disclosure-relief]: **D.C. Code § 32-581.04** — "An employer that violates § 32-581.03a shall be liable for each violation to each employee subjected to the violation for monetary relief in an amount of $250." *D.C. Code § 32-581.04(d)(4).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.04>
+
+[^noncompete-definition]: **D.C. Code § 32-581.01** — "‘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." *D.C. Code § 32-581.01(15).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.01>
+
+[^workplace-policy-def]: **D.C. Code § 32-581.01** — "‘Workplace policy’ means the rules and restrictions, whether written or as a matter of practice, implemented by an employer to govern the conduct of the employer's employees." *D.C. Code § 32-581.01(19).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.01>
+
+[^outside-work-carveout]: **D.C. Code § 32-581.01** — "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" *D.C. Code § 32-581.01(15)(B)(ii).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.01>
+
+[^confidentiality-carveout]: **D.C. Code § 32-581.01** — "Disclosing, using, selling, or accessing the employer's confidential employer information or proprietary employer information" *D.C. Code § 32-581.01(15)(B)(i).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.01>
+
+[^utsa-injunction]: **D.C. Code § 36-402** — "Actual or threatened misappropriation may be enjoined." *D.C. Code § 36-402(a).* <https://code.dccouncil.gov/us/dc/council/code/sections/36-402>
+
+[^lti-carveout]: **D.C. Code § 32-581.01** — "That provides a long-term incentive." *D.C. Code § 32-581.01(15)(C).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.01>
+
+[^sale-carveout]: **D.C. Code § 32-581.01** — "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" *D.C. Code § 32-581.01(15)(A).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.01>
+
+[^ellis-reasonableness]: **Ellis v. James V. Hurson Associates, Inc.** — "A promise is unenforceable on grounds of public policy if it is unreasonably in restraint of trade." *Ellis v. James V. Hurson Assocs., Inc., 565 A.2d 615 (D.C. 1989).* <https://www.courtlistener.com/opinion/1561257/ellis-v-james-v-hurson-associates-inc/#:~:text=A%20promise%20is%20unenforceable%20on,unreasonably%20in%20restraint%20of%20trade.>
+
+[^void-rule-retroactivity]: **D.C. Code § 32-581.02** — "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)(2).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.02>
+
+[^ellis-partial]: **Ellis v. James V. Hurson Associates, Inc.** — "we join those jurisdictions which have rejected the view that covenants not to compete must be enforceable in whole or not at all." *Ellis v. James V. Hurson Assocs., Inc., 565 A.2d 615 (D.C. 1989).* <https://www.courtlistener.com/opinion/1561257/ellis-v-james-v-hurson-associates-inc/#:~:text=we%20join%20those%20jurisdictions%20which,whole%20or%20not%20at%20all.>
+
+[^cumulative-rule]: **D.C. Code § 32-581.04b** — "The rights, remedies, and prohibitions accorded by the provisions of this chapter are in addition to and cumulative of any right, remedy, or prohibition accorded by the common law, federal law, or any District statute, and nothing contained in this chapter shall be construed to deny, abrogate, or impair any such common law or statutory right, remedy, or prohibition." *D.C. Code § 32-581.04b.* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.04b>
+
+[^deutsch-factors]: **Deutsch v. Barsky** — "we reverse that part of the trial court’s summary judgment decision relating to the validity and enforceability of the covenant" *Deutsch v. Barsky, 795 A.2d 669 (D.C. 2002).* <https://www.courtlistener.com/opinion/1439721/deutsch-v-barsky/#:~:text=we%20reverse%20that%20part%20of,and%20enforceability%20of%20the%20covenant>
+
+[^steiner-reformation]: **Steiner v. American Friends of Lubavitch (Chabad)** — "We also formally adopt the doctrine of equitable reformation to modify contract provisions, but hold that the trial court's equitable revision of the noncompete clause in this case exceeded the bounds of that doctrine by describing the activities the Steiners were precluded from engaging in using broader language than the terms of the employment contract itself and thus effectively expanding the scope of the restrictions contained in the noncompete clause." *Steiner v. Am. Friends of Lubavitch (Chabad), 177 A.3d 1246 (D.C. 2018).* <https://www.courtlistener.com/opinion/4464037/yehuda-steiner-v-american-friends-of-lubavitch-chaabad/#:~:text=We%20also%20formally%20adopt%20the,contained%20in%20the%20noncompete%20clause.>
+
+[^hce-requirements-narrowing]: **D.C. Code § 32-581.03** — "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:" *D.C. Code § 32-581.03(a).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.03>
+
+[^relief-amounts]: **D.C. Code § 32-581.04** — "An employer that attempts to enforce a non-compete provision that is unenforceable or void as provided in §§ 32-581.02(a)(2) and 32-581.03(a) shall be liable to each employee against whom the employer attempted to enforce the invalid non-compete provision for relief in an amount not less than $1,500." *D.C. Code § 32-581.04(d)(2)(A).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.04>
+
+[^oag-enforcement]: **OAG Press Release on Non-Compete Settlements (Nov. 17, 2023)** — "On October 1, 2022, a new DC law went into effect that makes it illegal for employers to impose non-compete agreements on most DC workers who earn less than $150,000 per year." *Office of the Attorney General for the District of Columbia, Press Release (Nov. 17, 2023).* <https://oag.dc.gov/release/attorney-general-schwalb-announces-three-district>
+
+[^relief-subjecting]: **D.C. Code § 32-581.04** — "An employer that violates § 32-581.02(a)(1) shall be liable for each violation to each employee subjected to the violation for monetary relief in an amount not less than $500 and not greater than $1,000." *D.C. Code § 32-581.04(d)(1)(A).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.04>
+
+[^relief-subsequent]: **D.C. Code § 32-581.04** — "For any subsequent violation of § 32-581.02(a)(1) , an employer that has been found liable pursuant to subparagraph (A) of this paragraph shall be liable for relief in an amount not less than $3,000 to each affected employee." *D.C. Code § 32-581.04(d)(1)(B).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.04>
+
+[^admin-penalty]: **D.C. Code § 32-581.04** — "The Mayor may assess an administrative penalty of no less than $350 and no more than $1,000 for each violation of this chapter" *D.C. Code § 32-581.04(b)(1).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.04>
+
+[^enforcement-authority]: **D.C. Code § 32-581.04** — "The Mayor and Attorney General shall administer and enforce this chapter consistent with their respective powers and rights under § 32-1306(a) , (a-1) , (b) , and (c) ." *D.C. Code § 32-581.04(a)(1).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.04>
+
+[^private-enforcement]: **D.C. Code § 32-581.04** — "A person aggrieved by a violation of this chapter may pursue relief by filing:" *D.C. Code § 32-581.04(c)(1).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.04>
+
+[^retaliation-ban]: **D.C. Code § 32-581.02** — "No employer may retaliate or threaten to retaliate against a covered employee for:" *D.C. Code § 32-581.02(b).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.02>
+
+[^retaliation-relief]: **D.C. Code § 32-581.04** — "An employer that retaliates against an employee in violation of § 32-581.02(b) or § 32-581.03(b) shall be liable for each instance of retaliation to each employee subject to the retaliation in an amount not less than $1,000 and not more than $2,500." *D.C. Code § 32-581.04(d)(3)(A).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.04>
+
+[^oag-nopoach]: **OAG Press Release on Non-Compete Settlements (Nov. 17, 2023)** — "Through its investigation, OAG uncovered evidence that Hissho violated the District’s Antitrust Act and the District’s ban on non-compete agreements by including a ‘no-poach’ clause in its contracts with franchisees, which prevented employees from leaving one fast food franchise to work for another franchise in the same chain." *Office of the Attorney General for the District of Columbia, Press Release (Nov. 17, 2023).* <https://oag.dc.gov/release/attorney-general-schwalb-announces-three-district>
+
+[^antitrust]: **D.C. Code § 28-4502** — "Every contract, combination in the form of a trust or otherwise, or conspiracy in restraint of trade or commerce all or any part of which is within the District of Columbia is declared to be illegal." *D.C. Code § 28-4502.* <https://code.dccouncil.gov/us/dc/council/code/sections/28-4502>
+
+[^tolling-duration-cap]: **D.C. Code § 32-581.03** — "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" *D.C. Code § 32-581.03(a)(1)(C)(i).* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.03>
+
+[^tolling-cumulative]: **D.C. Code § 32-581.04b** — "The rights, remedies, and prohibitions accorded by the provisions of this chapter are in addition to and cumulative of any right, remedy, or prohibition accorded by the common law, federal law, or any District statute" *D.C. Code § 32-581.04b.* <https://code.dccouncil.gov/us/dc/council/code/sections/32-581.04b>