Effective June 30, 2027, noncompetes in the employment context are void and unenforceable. The ban applies to all existing and future agreements that are challenged in litigation after June 30, 2027.
Under the statute, noncompetes broadly include contractual provisions:
- that prohibit or restrain an employee or independent contractor “from engaging in a lawful profession, trade, or business of any kind”;
- that prohibit the acceptance or transaction of business with a customer (sometimes referred to as “no-service” or “no-accept” provisions); and
- that impose forfeiture for competition penalties
The statute does not apply to:
- Non-solicitation provisions (though, such agreements must be limited to 18-months after termination and limited to current or prospective clients, customers, or patients with whom the employee “established or substantially developed a direct relationship”);
- Confidentiality agreements;
- Agreements preventing the disclosure of trade secret information;
- Agreements to repay out-of-pocket education expenses, if the agreement expires within 18 months of the date the employee started employment, limits repayment to the pro rata portion of the remaining time of the 18-month period, and releases the employee from the obligation to repay if the employee terminates the employment relationship for “good cause”; and
- Agreements entered by a franchisee, subject to the franchise sale meeting certain legal requirements.
The statute 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.”
Critically, the statute requires employers to affirmatively notify individuals about void noncompete agreements. Specifically, by October 1, 2027, employers must notify all current and former employees and independent contractors whose noncompete agreements are still effective that the noncompete provisions in those agreements are void and unenforceable.
Employers with people in Washington should (a) stop using noncompetes no later than June 30, 2027; and (b) determine if notices must be sent to current or former employees or independent contractors before that date.
Benjamin Fink is known for his work in noncompete, trade secret and competition-related disputes. A shareholder at Berman Fink Van Horn, Ben concentrates his practice in business and employment litigation.