Employers in Washington will soon be prohibited from using noncompete agreements in the workplace. Under Engrossed Substitute House Bill 1155, signed by Governor Ferguson on March 23, 2026, virtually all noncompetition covenants between employers and workers will be void and unenforceable beginning June 30, 2027, regardless of when the agreement was signed or how much the worker earns. Employers also will be required to provide written notice by October 1, 2027, to affected current and former workers informing them that their noncompete agreements are no longer enforceable.
Key Changes and Takeaways for Employers:
Current Washington Law on Noncompetition Agreements: Washington first enacted significant restrictions on noncompetition covenants in 2019 and later amended those restrictions in 2024. Under current law, noncompetition agreements are permitted only in limited circumstances. Among other requirements, they may be used only if employees and independent contractors meet statutory earnings thresholds, which are adjusted annually. For 2026, those thresholds are $126,858.83 for employees and $317,147.09 for independent contractors.
Current law also limits enforceability through several timing and compensation requirements. For prospective employees, the employer must disclose the noncompetition agreement in writing before or at the time the employee initially accepts the job offer, whether orally or in writing. For existing employees, a noncompete signed after employment begins is unenforceable unless supported by independent consideration. And when employment ends because of a layoff, the covenant cannot be enforced unless the agreement provides continued compensation during the restricted period equal to the employee’s base salary at termination, offset by any earnings from other employment.
What Changes on June 30, 2027: Beginning June 30, 2027, virtually all noncompetition covenants will be void and unenforceable, regardless of when the parties entered into the agreement. This means that existing noncompetition covenants that are still within their stated enforcement period will become unenforceable as of the effective date.
The new law also prohibits more than actual enforcement. Employers may not enforce, attempt to enforce, or threaten to enforce a prohibited noncompetition covenant. Employers also may not represent to an employee or worker that they are subject to a prohibited covenant, and may not enter into or attempt to enter into a prohibited noncompete after the law takes effect.
Broader Definition of “Noncompetition Covenant:” The law also broadens what may qualify as a prohibited noncompetition covenant. Washington law already defines a noncompetition covenant as an agreement that prohibits or restrains an employee or independent contractor from engaging in a lawful profession, trade, or business of any kind, including agreements that “directly or indirectly prohibit the acceptance or transaction of business with a customer.” RCW 49.62.010(4). The new law expands the definition of “noncompetition covenant” to include certain provisions that require a worker to return, repay, or forfeit compensation, benefits, or other rights because the worker engaged in a lawful profession, trade, or business.
What is Still Permitted: The new law does not prohibit all restrictive covenants. The following are still permissible:
- Nonsolicitation agreements: Nonsolicitation agreements will remain permissible, but only if they are narrowly tailored. Employers may still prohibit employees, upon termination, from actively soliciting current employees to leave the company. Employers may also restrict solicitation of current or prospective customers, patients, or clients, but only where the employee established or substantially developed a direct relationship with that person or entity through the employee’s work for the employer, and only for up to 18 months after employment ends.
- Contracts related to the sale of a business and franchise agreements: The new law does not apply to certain business-sale and franchise-related agreements. Agreements tied to the purchase or sale of a business’s goodwill, or to the acquisition or disposition of at least 1% ownership interest, remain permissible. The law also excludes certain agreements entered into by a franchisee in connection with the sale of a franchise, so long as the sale complies with statutory requirements.
- Educational expenses repayment agreements: Employers may still use certain educational expense repayment agreements, but only within statutory limits. Employers may still require employees to repay out-of-pocket educational expenses, so long as the agreement:
- – Expires within 18 months of the employee’s start date;
- – Limits repayment to the pro rata portion of the remaining 18-month period; and
- – Releases the employee from repayment obligations if the employee separates for “good cause.”
Notice Requirements: The new law also creates an affirmative notice obligation. By October 1, 2027, employers must “make reasonable efforts” to notify any current or former employee or independent contractor whose noncompetition covenant remains within its effective period. The notice must be in writing and inform the worker that the noncompetition covenant is void and unenforceable.
What Employers Should Do Now: Employers should use the transition period to audit their restrictive covenant agreements and related employment documents. At minimum, employers should identify any existing noncompete provisions in employment agreements, offer letters, equity agreements, bonus plans, severance agreements, independent contractor agreements, handbooks, confidentiality agreements, and standalone restrictive covenant documents.
Employers should also review nonsolicitation, confidentiality, repayment, forfeiture, and clawback provisions to ensure they do not function as prohibited restraints on lawful work.
Finally, employers should develop a process for providing written notice by October 1, 2027, to current and former employees and independent contractors whose noncompete agreements remain within their effective periods.
Please contact Abigail Maurer or another member of the Williams Kastner Labor & Employment practice team for assistance in preparing for these significant changes to Washington’s noncompete laws.