On March 23, 2026, Washington Governor Bob Ferguson signed House Bill 1155 into law. The law takes effect on June 30, 2027 and renders noncompete agreements between Washington workers and their employers void and unenforceable, regardless of when the agreement was signed.
In 2019, Washington enacted a law that restricted noncompetes for lower-wage earners. The legislature stated that this prior law “did not go far enough” and that broadly banning noncompete agreements is necessary to “incentivize innovation and entrepreneurship” and “increase wages,” among other cited benefits. HB 1155 amends the prior law to proactively and retroactively ban noncompete agreements within the state.
Broad Prohibition on Noncompete Agreements
The law broadly defines noncompete agreements as “every written or oral covenant, agreement, or contract that prohibits or restrains an employee or independent contractor from engaging in a lawful profession, trade, or business of any kind.” The law goes even further to specify that any agreement that “directly or indirectly prohibits the acceptance or transaction of business with a customer” amounts to an unenforceable noncompete agreement under the law. Also banned is any provision that requires employees or independent contractors to “return, repay, or forfeit any right, benefit, or compensation, as a consequence of the individual engaging in a lawful profession, trade, or business of any kind.” In short, the new law bans not only true noncompetition provisions but also non-acceptance-of-business provisions and forfeiture-for-competition provisions.
Exceptions for Other Restrictive Covenants
The law does not prohibit employers from requiring employees and independent contractors to enter into other types of restrictive covenants. Nonsolicitation agreements, confidentiality and trade secrets agreements, sale-of-business agreements, franchise agreements, and educational expense repayment agreements are still enforceable.
- Nonsolicitation agreements remain enforceable under the law but are now subject to new restrictions. Nonsolicitation agreements (1) prohibit an employee from actively soliciting other employees to leave the employer; or (2) prohibit an employee from soliciting those current or prospective customers, patients, or clients with whom the employee established a direct relationship with via their work with the employer in an effort to shift business away from the employer. Customer nonsolicitation agreements must be limited to 18 months or less following the termination of employment. Agreements that directly or indirectly prohibit the acceptance of business with a customer, patient, or client are not nonsolicitation agreements under the law, and are instead construed as a form of unenforceable noncompetition provision.
- Confidentiality and trade secret protection agreements are not affected by the law. Employers may still prevent employees and independent contractors from divulging confidential information, trade secrets, and inventions.
- Sale-of-business covenant agreements are still enforceable under the law, but only if the person signing the covenant purchases, sells, acquires, or disposes of an ownership interest representing 1% or more of the business.
- Franchise agreements are not affected by the law. Noncompete agreements entered into as part of a franchise sale are enforceable so long as the sale complies with applicable state law.
- Educational expense repayment agreements remain enforceable so long as the agreement expires within the first 18 months of the employee’s employment, limits repayment to the pro-rata portion of the remaining time of the 18-month period, and releases the employee from the obligation to repay if the employee’s separation from employment is based on “good cause” under applicable state law.
Required Notice to Employees
By October 1, 2027, employers must make reasonable efforts to notify all current and former employees and independent contractors who are subject to a noncompete agreement still within its effective time period that their noncompete agreements are void and unenforceable. This notice must be provided in writing. The law, however, does not provide any additional detail about what other information, if any, must be included in the notice.
Penalties for Violations
The state attorney general may bring an enforcement action on behalf of aggrieved individuals; the law also provides a private right of action to these aggrieved individuals. If a court or arbitrator finds that an employer has violated the law, the employer must pay the employee or independent contractor the greater of their actual damages or a statutory penalty of $5,000, plus reasonable attorneys’ fees, expenses, and costs incurred.
Key Takeaways and Considerations for Employers
The law applies to all previously executed and future noncompete agreements. Accordingly, employers should begin preparing now to establish a compliance plan before the law goes into effect on June 30, 2027. Employers should:
- Review all employee and independent contractor agreements containing restrictive covenants to identify covenants rendered unenforceable by the law.
- Determine whether to strike unenforceable noncompete agreements from the agreements or to draft new agreements to be executed by employees and independent contractors.
- Modify existing form employee and independent contractor agreements.
- Consider alternative means of protection, such as confidentiality agreements, trade secret agreements, and compliant nonsolicitation agreements.
- Establish a plan to send written notices to current and former employees and independent contractors subject to an active noncompete agreement by October 1, 2027.
Employers must act proactively to comply with new requirements voiding noncompete agreements, including providing written notice and preparing for enforcement risks.
- All existing and future noncompete agreements will become unenforceable, and employers must notify affected parties in writing by October 1, 2027.
- Violations can result in significant penalties, including damages or a $5,000 statutory penalty, plus attorneys’ fees and costs.
- Employers should review and update agreements, consider alternative protections, and develop a compliance plan before the law takes effect on June 30, 2027.
If you have any questions, or would like additional information, please contact one of the attorneys on our Labor & Employment team.
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