Washington has become the fifth state to ban the use of all employee noncompetition agreements, joining California, Minnesota, North Dakota and Oklahoma. Effective June 30, 2027, all noncompetes – regardless of when they were entered – are void and unenforceable.
Signed into law earlier this week, H.B. 1155 amends a 2019 state law that currently bans the use of noncompetition covenants only for lower-wage earners. When the amendments take effect in 2027, the law will ban noncompetition agreements for all Washington-based workers and businesses. The amendments also will expand the definition of noncompete agreements (which must be broadly construed) to include:
- Agreements between performers and a performance space that prohibit or restrict the performer from engaging in a lawful performance; and
- Any provision that requires an individual to return, repay or forfeit any right, benefit or compensation for engaging in a lawful profession, trade or business.
The amendments also will require the definition of nonsolicitation agreements – which are still permitted – to be narrowly construed.
In passing the amendments, the legislature found that “noncompetition covenants restrict workers’ mobility, impede efforts to correct inequities, and significantly suppress workers’ wages,” including for those who are not themselves subject to a noncompete agreement. It said businesses have “more specific and effective legal means to protect intellectual property, trade secrets, and clients without harming workers, contractors, and the public.”
Under the law, noncompete agreements do not include:
- Solicitation agreements;
- Confidentiality agreements;
- Agreements prohibiting use or disclosure of trade secrets or inventions;
- Agreements for purchasing or selling the goodwill of a business or acquiring or disposing of an ownership interest;
- Franchising agreements; or
- Agreements to repay out-of-pocket educational expenses that meet statutory requirements.
Employers must provide written notice by October 1, 2027, to all current and former employees and independent contractors whose noncompetition agreements are still operative when the amendments take effect, that their noncompetition covenant is void and unenforceable.
