Updated on May 10, 2019
Governor Jay Inslee signed a bill on Wednesday that significantly changes the law regarding noncompetition (“non-compete”) agreements for Washington employers and employees. The bill states that starting January 1, 2020, non-compete agreements are only enforceable if:
- the employer discloses the terms of the non-compete no later than the time of acceptance of the offer of employment or, if the non-compete agreement is entered into after the start of employment, it is supported by independent consideration;
- the employee’s annual salary exceeds $100,000, or $250,000 if an independent contractor (adjusted annually for inflation);
- where the employee is terminated as a result of layoff, the non-compete provides that the employee will be compensated at their base salary rate for the enforcement period, minus compensation earned through subsequent employment during the enforcement period; and
- the non-compete does not exceed 18 months, unless the employer proves by clear and convincing evidence that a longer term is necessary to protect the party’s business or goodwill.
Non-compete agreements are often used by employers to restrict the ability of employees to work for a competing business. The new bill is intended to release many of the existing restrictions on “workforce mobility” to support economic growth and development.
The bill does not affect nonsolicitation agreements, confidentiality agreements, restrictions on disclosure of trade secrets or inventions, or non-compete agreements as part of a sale or purchase of a business.
The bill will take effect on January 1, 2020. Once in effect, employers would not be able to enforce previously signed non-competes that do not meet the standards for non-competes under the new law. Therefore, Washington employers need to start planning for this change now.
Please contact any member of Ryan Swanson’s employment group if you have questions about your non-compete agreements.