New Restrictions on Non-Compete Agreements in Washington State
Update: On May 8, 2019, Governor Inslee signed the bill into law.
Last week the Washington State Legislature passed a bill that substantially restricts the scope of enforceable non-compete agreements. Under the new rules, non-compete agreements will be unenforceable unless:
- The employer either (i) discloses terms of the non-compete agreement when making an offer of employment, or (ii) provides separate consideration for the non-compete agreement;
- The employee earns more than $100,000 a year from the employer seeking to enforce the non-compete agreement; and
- The employer compensates employees that are laid off but still subject to the non-compete agreement.
The bill also provides that non-compete agreements with a duration of more than 18 months are presumptively unreasonable and unenforceable, though that presumption may be overcome with a showing of clear and convincing evidence that the extended duration is necessary to protect the employer’s business or goodwill. The bill further provides that a non-compete agreement signed by a Washington employee will be void and unenforceable if it requires the employee to adjudicate disputes arising under the agreement outside of Washington state.
The bill is expected to be signed into law by Governor Jay Inslee in the coming weeks. The restrictions will apply to existing non-compete agreements as well as new ones.
Please contact us if you have questions about how this new law will impact you or your business.