Employers in Washington State need to ensure that their onboarding processes are in compliance with Washington State Non-Compete Laws. Generally, non-compete agreements are legal in Washington, but only under certain circumstances.
Here is everything you need to know about non-compete agreements in Washington State.
Under Washington State Non-Compete Law (RCW 49.62), a non-compete agreement, formally regarded as a noncompetition covenant, is a written or oral agreement restraining an employee or independent contractor “from engaging in a lawful profession, trade, or business of any kind”.
The definition of a non-compete agreement specifically does not include the following:
In the following circumstances, non-compete clauses are unenforceable in Washington State:
It’s also worth noting that non-compete agreements are typically no longer enforceable after 18 months of separation from employment. However, a court may decide that a longer duration is permissible if there is clear and convincing evidence that the longer duration is necessary to protect the employer's business or goodwill.
Employers should update their onboarding procedures and potentially have a secondary handbook for employees in which non-compete agreements are unenforceable.
The following table breaks down the non-compete income thresholds for both employees and independent contractors:
| Type of Worker | 2025 Income Threshold | 2026 Income Threshold |
|
Employee |
$123,394.17 |
$126,858.83 |
|
Independent Contractor |
$308,485.43 |
$317,147.09 |
It’s important to note that compensation is annualized to determine whether or not a worker’s income is over the threshold. For example, if an employee doesn’t earn $123,394.17 over the course of a year because they only worked for 6 months, but would have made $124,000 had they worked the whole year, they are considered over the threshold.
There are a few other important things to consider when it comes to non-compete agreements in Washington State:
Void and Unenforceable Provisions
It is important to note that the following provisions are considered to be void and unenforceable, meaning you can not include them in your non-compete agreement:
Whether or not an employer can prohibit a worker from moonlighting, or working a second job, depends on how much the worker makes.
Generally, in order for an employer to prohibit moonlighting, the worker must make at least twice the current applicable Washington State Minimum Wage. However, there are some exceptions.
As a result of Washington HB 1155, effective June 30th, 2027, all noncompete agreements shall be void and unenforceable in the State of Washington.
Under the updated law, noncompete agreements shall be defined as any agreement that:
Prohibits an employee or independent contractor from engaging in a lawful profession, trade, or business
Threatens or requires an individual to return or repay a right, benefit, or compensation as a consequence of the individual engaging in a lawful profession, trade, or business
The ban on noncompete agreements applies to all employers, both public and private. Once the update goes into effect, employers will have until October 1st, 2027 to make a reasonable effort to notify employees and former employees that any agreements are no longer enforced.
Yes, but only under specific circumstances. Washington law allows non-compete agreements (also called noncompetition covenants) only if they meet the requirements outlined in RCW 49.62. Employers must comply with rules regarding employee compensation, disclosure, and other legal requirements for a non-compete agreement to be enforceable.
A non-compete agreement is a written or oral agreement that prevents an employee or independent contractor from engaging in a lawful profession, trade, or business after leaving an employer.
A non-compete agreement may be unenforceable if the employer did not disclose the agreement before or at the time the employee accepted the job offer, the agreement was signed after employment began without providing independent consideration (such as additional compensation or benefits), the employee was laid off and the employer does not continue paying the employee's base salary during the restricted period, minus earnings from new employment, or the employee or independent contractor earns less than the state's annual income threshold. If any of these conditions apply, the non-compete agreement may not be legally enforceable.
Yes. Washington sets annual compensation thresholds that determine whether a non-compete agreement can be enforced. For employees, the threshold is $126,858.83 annually. For independent contractors, the threshold is $317,147.09 annually.
Generally, a non-compete agreement lasting more than 18 months after employment ends is presumed unenforceable. A court may allow a longer restriction only if the employer can provide clear and convincing evidence that the additional time is necessary to protect the business or its goodwill.
If an employer wants to enforce a non-compete agreement after laying off an employee, the employer must continue paying the employee's base salary during the enforcement period, reduced by any compensation the employee earns from subsequent employment. Without these continued payments, the non-compete generally cannot be enforced.
Employees can bring forth a lawsuit in the event an employer violates the state’s non-compete laws, so it’s crucial that you maintain compliance.
Businesses that are struggling with compliance may want to consider reaching out to a Washington Payroll company for assistance.
To learn more about how PayNW is helping countless businesses in Washington with onboarding and compliance, contact us today.