Will Your Washington Noncompete Agreements Be Enforceable in the Future?– Posted by Hillary J. Collyer
Will your Washington Noncompete Agreements Be Enforceable in the Future? Representatives Introduce Litigation Aimed at Prohibiting Noncompete Agreements
Most states, Washington included, recognize and enforce various noncompete agreements in employment contracts. A few states, most notably California, totally ban or prohibit noncompete agreements except in limited circumstances. Although noncompete agreements are currently enforceable under Washington law, this could change in the near future. Fueled by recent news coverage critical of companies such as Amazon and Jimmy John’s requiring low-level, low-wage earners to sign such agreements, there is widespread backlash against noncompetes in this state, which has prompted lawmakers to introduce legislation targeting such provisions.
There are three bills pending before the Washington House of Representatives which seek to severely restrict or ban noncompetes altogether. One of the bills, HB 1577, would make noncompete agreements for low-wage positions unenforceable and create a presumption that a restriction period of more than 6 months is unreasonable and thus unenforceable. HB 1577 would also make a noncompete agreement unenforceable if the employee is laid off or terminated without reasonable cause.
The second of these proposed bills would only prohibit the use of noncompete agreements in the medical field. HB 1173 would ban noncompetes that restrict the right of physicians to practice in a geographic area for a period of time after the termination of an employment contract. This proposal derives in part from the fact that the American Medical Association discourages such agreements because they tend to infringe upon a patient’s right to choose their physician.
Finally, HB 1926, the farthest reaching of the three proposals, would ban noncompete agreements outright except in specific, limited circumstances, such as when the owner of a business sells the business and agrees to refrain from operating a similar business within the same geographic area.
HB 1577 and HB 1926 include language that would make the proposed restrictions applicable only to noncompetes entered into on or after the effective date of the laws. This means that agreements entered into before the effective date of the law would not be impacted.
Stay tuned to learn which, if any, of the three bills becomes the new law in Washington.
If you have a question about the enforceability of a noncompete or non-solicitation agreement under Washington law, I am happy to discuss this with you and can be reached at (206) 624-1230.