Washington State Just (Practically) Banned Non-Compete Agreements – Now What?

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A new law, which will go into effect on January 1, 2020, is making non-compete agreements in employment contracts a much more limited option for Washington State employers. The new law makes non-competes unenforceable for employees with earnings under a certain level, and it only allows for enforcement of non-competes if they are 18-months or shorter in duration.

Even non-compete agreements that were signed prior to January 1, 2020 could be voided under the new law, starting in 2020. If you have used a non-compete clause or contract with your employees or independent contractors, you may wish to consult an attorney to evaluate whether your agreement will be valid after the new law takes effect.

There are some other options for employers who might be concerned about employees directly competing with their business. The updated Washington State non-compete law expressly allows employers to limit non-solicitation of current clients or customers by company employees or contractors.  The new law also provides protection for company trade secrets.

A non-compete is now enforceable only with 1) employees who earn more than $100,000 per year; or 2) independent contractor who are paid $250,000 or more per year by your company. These thresholds will be adjusted annually to account for inflation.

The new law also contains moonlighting provision forbidding employers from restricting outside employment activities for employees making less than twice the state’s minimum hourly wage (which will be $13.50 per hour, as of January 1, 2020).

Non-compete agreements entered into by purchasers or sellers of a business are NOT included the new law. So if you are buying a Washington business, you will be able to enforce a non-compete clause against the seller/former owner of the business you are purchasing.

Limitless Law PLLC is here to help if you have any legal questions about your business.  Give us a call at 360-685-0145!

You can read more about Washington State’s new non-compete law at the following links:

GeekWire: “Washington state legislators pass law restricting non-compete agreements”

Washington State Human Resource Management: “Washington State Enacts Comprehensive Noncompete Reform”