Washington State Immediately Bans Non-Competes
Washington State voids all non-compete agreements, requiring major contract adjustments.
Why it matters: General counsel must revise employment contracts to comply with the new law, impacting legal operations.
- Non-compete ban applies to all workers in Washington.
- Bill passed House 62-33, Senate 30-19 in March 2023.
- Enforcement limited to employees earning over $100,000 annually.
- Violations enable legal action by Attorney General or employees.
Washington State has enacted a ban on non-competition agreements through Engrossed Substitute House Bill 1155 (ESHB 1155), effective immediately. This legislation voids non-compete covenants for all workers, marking a significant shift towards enhancing employee mobility and rights.
- Employers may only enforce non-competes if the employee earns more than $100,000 annually, with terms disclosed when the job offer is made.
- Non-compete agreements longer than 18 months are presumed unreasonable unless justified with clear and convincing evidence.
- For employees laid off, a "garden leave" provision applies, requiring compensation equivalent to the base salary minus any new earnings. "Garden leave" entails paying employees during the notice period while they are not working.
According to the legislature, these agreements are seen as impediments to innovation and job mobility. Representative Liz Berry underscored this view, stating the policy empowers workers to seek better opportunities without constraints from former employers.
Under the new law, if employers violate these rules, the State Attorney General or affected employees can file lawsuits seeking actual damages or a $5,000 penalty, plus attorney fees. By October 1, 2027, all employees with existing non-competes must be informed that these covenants are void.
By the numbers:
- 62-33 — Vote count in the Washington House for ESHB 1155
- 30-19 — Vote count in the Washington Senate for ESHB 1155
- $100,000 — Minimum salary for enforcing a non-compete agreement
What's next: Businesses must notify employees with existing non-competes they are void by October 1, 2027.