Washington State has enacted a sweeping new law that will effectively eliminate most non-compete agreements for workers in the state. The legislation is intended to foster economic growth and competition by imposing a near-total ban on noncompetition agreements, which are contracts that prevent employees or independent contractors from working for a competitor or starting a similar business after leaving their current employer.
Beginning June 30, 2027, Washington State employers will be prohibited from entering into, enforcing, attempting to enforce, or even representing that a worker is bound by a non-compete agreement. This represents a significant departure from Washington’s prior framework, which previously limited non-competes only for low-wage earners under the 2020 law. The new law goes much further by effectively imposing a near-total ban on non-compete agreements, similar to the approach taken in California.
Non-Compete Ban Overview
The new law applies broadly to employees as well as independent contractors and renders existing non-competes void as of June 30, 2027, regardless of when they were originally signed. Unlike Washington’s prior law, which imposed income thresholds and permitted non-competes for higher-earning workers, the new law eliminates those thresholds entirely in favor of a near-total ban.
The legislation also provides detailed clarification on what constitutes a prohibited noncompetition covenant. This includes not only traditional non-compete clauses, but also provisions that indirectly restrict a worker’s ability to engage in lawful work, such as agreements that limit business with customers or require repayment of compensation tied to post-employment competition. By defining these arrangements broadly, the law aims to prevent employers from using alternative structures to achieve the same restrictive effect.
Enforcement and Penalties
The law includes meaningful enforcement mechanisms and significantly increases employer risk. It is unlawful for employers to enforce, attempt to enforce, or threaten to enforce a noncompetition agreement. If an employer violates these provisions, workers may recover actual damages or a statutory penalty of $5,000 per violation, whichever is greater, along with attorneys’ fees and costs.
Notice Requirements and Key Deadlines for Employers
In addition to the prohibition itself, the law imposes an affirmative obligation on employers to notify current and former workers who are subject to non-competes that such provisions are unenforceable. This notice must be provided in writing by October 1, 2027, and applies regardless of whether the agreement is ever enforced. Failure to provide the required notice can itself give rise to liability under the statute, including the same statutory penalties and fee-shifting provisions described above.
Exceptions for Narrow Non-solicits
Importantly, the law clarifies that nonsolicitation agreements remain permissible, but must be narrowly interpreted. These agreements may prohibit a departing worker from actively soliciting the employer’s current customers or employees, but cannot function as a de facto non-compete. Employers may also rely on other permissible protections, including confidentiality agreements, trade secret protections, intellectual property assignment provisions, and certain educational expense repayment agreements, provided they do not operate as a restraint on lawful employment.
Non-compete provisions tied to the sale of a business can also still be enforceable as long as they are reasonable in scope, duration, and geographic reach. That said, given the breadth of Washington’s new law, this is an area to watch closely, and such provisions should be drafted carefully to ensure they fall within any applicable exceptions.
What Employers Should Do Now
Employers who continue to rely on outdated non-compete provisions face significant risks after the law takes effect. Employers should begin preparing now by auditing existing agreements, updating their employment and contractor templates, and developing a process to ensure timely notice is provided. In addition, internal teams, including HR and management, should be trained on the upcoming changes to avoid inadvertently referencing or relying on unenforceable restrictions.
How Foundry Law Group Can Help
Washington’s new non-compete ban represents a significant shift that creates legal and operational risk for employers who are not prepared.
Our team works with companies to proactively identify risk, update existing agreements, and implement compliant, business-friendly alternatives to non-competes. We can assist in auditing your current contracts, strengthening confidentiality and non-solicitation protections, and developing a tailored strategy to protect your business moving forward.
By taking action now, you can avoid costly mistakes, minimize potential liability, and ensure your business is positioned to operate effectively under Washington’s new legal landscape.
