Non-Compete Agreements in Washington: 2020 Reform Rules

Washington's 2020 Non-Compete Act

Washington enacted one of the most comprehensive non-compete statutes in the country with RCW 49.62, effective January 1, 2020. The law imposes income thresholds, duration limits, and significant penalties for non-compliance.

Income Thresholds

Non-competes are only enforceable against:

• Employees earning more than $120,559.99 annually (adjusted annually for inflation)
• Independent contractors earning more than $301,399.97 annually (also adjusted)

Non-competes against workers below these thresholds are void and unenforceable.

Duration Limit

Non-competes cannot exceed 18 months unless the employer can prove a longer restriction is necessary to protect the employer's goodwill or business interests. The burden of proving the need for a longer period rests on the employer.

Additional Requirements

• Disclosure at or before acceptance: The non-compete must be disclosed to the employee at or before the time of acceptance of the offer of employment. For existing employees, independent consideration is required.
• Layoff provision: If the employee is terminated as a result of a layoff, the non-compete is enforceable only if the employer pays the employee their base salary during the enforcement period minus any earnings from new employment.
• Choice of law: Employers cannot use choice-of-law provisions to avoid Washington's non-compete law for employees primarily residing in Washington.

Penalties for Violations

An employer who enforces or threatens to enforce an unenforceable non-compete is liable for:

• Actual damages or a statutory penalty of $5,000, whichever is greater
• Reasonable attorney fees, costs, and expenses

What Is Not Covered

The statute does not restrict:

• Non-solicitation agreements (unless they function as non-competes)
• Non-disclosure agreements
• Non-competes in the sale of a business
• Confidentiality agreements protecting trade secrets

Red Flags

• Employee earns below the income threshold
• Non-compete exceeds 18 months without employer justification
• Not disclosed at or before acceptance of employment
• No independent consideration for existing employees
• Employer attempting to enforce after a layoff without paying base salary

When to Consult a Lawyer

Consider consulting a Washington employment attorney if you earn below the statutory threshold, if the non-compete was not disclosed before you accepted the job, if you were laid off, or if your employer is threatening enforcement. Washington's penalty provisions give employees significant leverage.

This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.