Washington Significantly Restricts Noncompetition Agreements
Washington has enacted sweeping changes to the enforceability of noncompetition agreements. House Bill 1155, effective June 30, 2027, will render most noncompetition covenants void and impose new compliance obligations on employers and businesses.
Key Takeaways
- Most Noncompetition Agreements Will Be Void. Beginning June 30, 2027, most noncompetition agreements—especially those involving employees—will be unenforceable, regardless of when they were signed.
- Broader Definition of “Noncompetition.” The law expands what qualifies as a noncompetition covenant, potentially capturing provisions that restrict doing business with customers, patients, or clients and that have historically straddled the line between a noncompetition covenant and a nonsoliciation covenant.
- Mandatory Notice Requirement. Employers must notify affected workers that their noncompetition agreements are void.
- Meaningful Penalties for Noncompliance. Violations may result in $5,000 statutory damages per violation, plus attorneys’ fees and enforcement by the Washington Attorney General.
What Counts as a Noncompetition Agreement?
The statute defines a noncompetition covenant broadly to include any agreement that restrains an individual from engaging in a lawful profession, trade, or business.
This may include provisions that:
- Restrict accepting business from clients, customers, or patients.
- Function like nonsolicitation clauses but go further in limiting economic activity.
What Is Still Permitted?
Certain limited restrictions remain enforceable:
- Nonsolicitation agreements are still permitted but generally limited to 18 months.
- Noncompetition agreements tied to the sale of a business remain enforceable if the restricted party holds at least a 1% ownership interest.
Required Employer Action
By October 1, 2027, employers must make reasonable efforts to notify current and former workers and clearly state that any covered noncompetition covenant is void and unenforceable.
What You Should Do Now
- Review existing employment and contractor agreements.
- Identify provisions that may be impacted.
- Update template agreements.
- Plan for required notice delivery.
Questions? We Can Help
