Updated March 01, 2024
A Washington non-compete agreement prohibits an employee from working in the same industry after leaving an employer. If the employee is terminated they must be paid the equivalent of their wages (less pay from any new job). A non-compete is limited to 18 months and must be signed at the same time of accepting employment.
The legislature acknowledges that “workforce mobility is important to economic growth” and finds that some contracts may be deemed unreasonable.[1]
Laws
Legally Enforceable?
Yes, a non-competition is legal in Washington under the following conditions:[2]
Employees (limited)
- When accepting employment. A non-compete must be signed at the time of acceptance of employment. If the agreement is conditional until a later time, then it must specifically be written;
- After acceptance of employment. If a non-compete is signed after the acceptance of employment, then independent consideration must be presented to the employee;
- $100,000.00 annual pay. The employee must be receiving an annual amount greater than $100,000.00 (one-hundred thousand dollars). This also requires:
- Adjusted for inflation: Starting in 2020, the $100,000.00 number must be adjusted annually on January 1st by taking the adjusted inflation number from the previous September 30th. Employers are required to use CPI for urban wage earners and clerical workers (CPI-W).[3] and
- Terminated employee. If the employee is terminated by the employer, the non-compete will only be valid if their pay continues through the enforcement period (less any new pay from a new job).
- Disclosure statement. The employer must give a separate notice to the employer stating “the employer specifically discloses that the agreement may be enforceable against the employee in the future.”
Independent Contractors (limited)
- $250,000. The total amount for the project must exceed $250,000 (two-hundred thousand dollars) per year. Starting in 2000, the number must increase at the rate of inflation in accordance with CPI for urban wage earners and clerical workers (CPI-W).[4]
Performers (limited)
A performer cannot enter into a non-compete for more than 3 days. This statute was included to protect singers, comedians, and other related acts.[5]
Attorneys (prohibited)
No attorney may enter into an agreement that restricts their right to practice law within the State.[6]
Governing Law
A non-compete must use the governing law of Washington if an employee or independent contractor is based in the State (unless the governing State used has made non-compete agreements unenforceable).[7]
Maximum Term
18 months is the maximum allowed unless a party can give “clear and convincing evidence that a duration longer than eighteen months is necessary to protect the party’s business or goodwill.”[2]
What is “Reasonable?”
The legislature acknowledges that “workforce mobility is important to economic growth.” Therefore, a court may find that some contracts are deemed unreasonable and may be unenforceable.[1]
Penalties
If an employer violates State laws regarding non-competes, the aggrieved person will be entitled to $5,000 or their actual damages, plus reasonable attorneys’ fees, expenses, and costs incurred in the proceeding.[8]
If a court arbitrator rewrites, modifies or partially enforces a non-compete, the party seeking enforcement must pay the attorneys’ fees of the aggrieved person and also $5,000 or their actual damages.[9]
Blue Penciling
A Washington court will “blue pencil” or amend a non-compete that has overbroad terms to make enforceable. For example, an agreement that had a 5-year restriction was amended to 2.5 years to make it applicable under State law.[10]
“Non-Compete” Definition
“Noncompetition covenant” includes every written or oral covenant, agreement, or contract by which an employee or independent contractor is prohibited or restrained from engaging in a lawful profession, trade, or business of any kind.
A “noncompetition covenant” does not include:
(a) A nonsolicitation agreement;
(b) a confidentiality agreement;
(c) a covenant prohibiting use or disclosure of trade secrets or inventions;
(d) a covenant entered into by a person purchasing or selling the goodwill of a business or otherwise acquiring or disposing of an ownership interest; or
(e) a covenant entered into by a franchisee when the franchise sale complies with RCW 19.100.020(1).[11]