Employment-based noncompete agreements will become void and unenforceable in Washington by June 30, 2027, the National Law Review reported March 30.
The new law will apply retroactively to all noncompete agreements challenged in proceedings that commence on or after June 30, 2027. It defines noncompete agreements in broad terms to include any covenants or provisions that prohibit or retrain an employee or independent contractors from “engaging in a lawful profession, trade or business of any kind,” according to the report.
The new definition of noncompete also includes agreements that prohibit the acceptance or transaction of business with a customer or that impose forfeiture for competition penalties. Non-soliticitation agreements, confidentiality agreements, agreements preventing the disclosure of trade secrets or requiring the repayment of out-of-pocket education costs are not covered by the new law. Noncompete agreements entered by a franchisee are also not covered.
The Act also includes a sale-of-business exception, but the exception only applies if the person signing the noncompete “purchases, sells, acquires, or disposes of an ownership interest representing one percent or more of the business.”
Employers must notify employees of any newly required changes to their existing contracts by Oct. 1, 2027, according to the report.
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