Recently, the Washington Supreme Court held that noncompete agreements for employees earning less than twice the minimum wage must be reasonable and narrowly construed.  The court found that prohibiting employees from providing any kind of assistance to competitors exceeds the statutory duty of loyalty that an employee owes to their employer.

RCW 49.62.070 limits a Washington employer’s ability to restrict low-wage employee’s ability to obtain additional employment.  All employees have a duty of loyalty to their employer that generally prevents the employee from soliciting customers for a rival business or acting in direct competition with the employer.

RCW 49.62.070(1), with few exceptions, forbids a Washington employer from restricting, restraining, or prohibiting an employee who earns “less than twice the applicable state minimum hourly wage from having an additional job” and from restricting the employee from “supplementing their income by working for another employer, working as an independent contractor, or being self-employed.”  However, the employee is nevertheless obligated to uphold the “common law duty of loyalty” to the employer.

In Springer v. Freedom Vans LLC, the Court interpreted for the first time the parameters of RCW 49.62.070 and more specifically, the permissible extent of an employee’s duty of loyalty. The Court found that Washington employers cannot prohibit employees who make less than twice the minimum wage from engaging in “all kinds of assistance” with a competitor as such a restriction would be impermissibly broad.   The Court ruled that a noncompete agreement must meet the common law reasonableness standard based on the facts and circumstances of the individual employment situation.  The reasonableness assessment pre-dates the statutory restrictions on noncompete agreements in Washington and looks at factors including the need to protect the employer’s business or goodwill, whether the restraint on the employee is reasonably necessary, and whether enforcing the noncompete agreement violates public policy.

Unfortunately, Springer does not provide employers bright line rule for the scope of the duty of loyalty for low-wage employees.  Importantly, employers can still limit other employment when safety or scheduling expectations are at issue.  Employers with low-wage employees are encouraged to review noncomplete agreements, confidentiality agreements or policies, and employee handbooks for policies that limit low-wage employees from working elsewhere or providing assistance to competitors.

Employers with questions are encouraged to contact the Lasher Employment Team for an assessment.