Summary
- What is happening with non-compete agreements? On March 23, 2026, Washington’s governor signed Engrossed Substitute House Bill 1155, amending RCW 49.62.005 through RCW 49.62.080. Effective June 30, 2027, the law will bar most non-compete agreements with employees and independent contractors in Washington.
- What does the law do? The law generally prohibits non-competes: agreements that keep a worker from engaging in a lawful profession, trade, or business.
- Who is covered? The law applies to all Washington employers.
- What are the exceptions? They’re limited. Non-solicit and confidentiality agreements remain permissible, as do certain restrictions tied to the sale or purchase of a business.
- What are practical next steps? In most employment settings, non-competes will be off the table. Employers should begin reviewing existing agreements for compliance, separate enforceable covenants (e.g., non-solicits), and consult counsel before the law takes effect.
Washington’s governor signed Engrossed Substitute House Bill 1155, effective June 30, 2027. The law bans virtually all non-compete agreements between companies and employees and independent contractors.
The Law
The law replaces the prior wage-threshold framework, which allowed non-competes only if employees met a salary threshold. Under the new law, a non-compete is defined broadly as any agreement that “prohibits or restrains an employee or independent contractor from engaging in a lawful profession, trade, or business of any kind.”
This definition includes:
- agreements with performers that restrict where, when, or how they may perform
- agreements prohibiting accepting or doing business with a customer and
- forfeiture-for-competition agreements (requiring an individual to return, repay, or forfeit any right, benefit, or compensation as a consequence of engaging in a lawful profession, trade, or business of any kind).
Limited Exceptions
The law includes limited exceptions:
- customer and employee non-solicitation agreements (as defined) if no longer than 18 months after termination of employment
- confidentiality agreements
- covenants prohibiting the use or disclosure of trade secrets or inventions
- agreements with franchisees
- non-competes tied to the sale or purchase of an ownership interest of at least 1% of a business and
- agreements to repay educational expenses following an employment termination that meet specified requirements.
Action Steps for Employers
Employers should begin preparing now for the law’s effective date.
- First, inventory existing agreements, including offer letters, employment agreements, independent contractor agreements, equity plans, commission plans, and policy documents that contain restrictive covenant language.
- Second, identify potential non-compete language broadly. Employers should look for provisions that restrict an individual from working for a competitor, starting a business, serving certain customers, or working in a particular field, regardless of how the provision is labeled.
- Third, separate out provisions that may remain enforceable. These may include qualifying non-solicitation, confidentiality, trade secret, invention assignment, franchise, business-sale, and educational repayment provisions.
- Fourth, update templates and onboarding materials before June 30, 2027. Human resources and recruiting personnel should also be trained on what language to avoid going forward.
- Finally, employers should plan for transition and communication. That may include deciding whether to notify affected workers and ensuring managers and internal stakeholders are aligned on how these changes will be communicated.
For businesses that rely on restrictive covenants to protect customer relationships, confidential information, or intellectual property, individualized legal guidance may be important in developing compliant alternatives.
We will continue to monitor developments in this area. If you have questions regarding the information in this article, please contact Joshua D. Brittingham at Carney Badley Spellman PS.
Disclaimer: This post is for general informational purposes only and does not constitute legal advice. Reading it does not create an attorney-client relationship. For advice about your specific situation, consult a qualified attorney licensed in your jurisdiction.
