Starting in 2020 non-compete agreements will be severely restricted by new Washington State laws. The current statutes, RCW 49.62, can be found here. These changes will impact both new non-compete agreements and those that were in effect prior to January 1, 2020. A non-compete agreement limits an employee’s conduct once an employment relationship ends. These agreements attempt to prevent employees from using contacts made or information gained during employment in ways which might harm the former employer’s business.
The 2020 law change completely prohibits new non-compete agreements for employees who make less than $100,000 per year. Additionally, all previously existing non-compete agreements covering employees earning less than $100,000 per year are nullified. The new law also prohibits an employee who earns less than $100,000 per year from voluntarily entering into a non-compete agreement.
These new restrictions may encourage employers to simply pay an employee more than $100,000 per year in order to allow for a non-compete agreement to be implemented. Employers are allowed to offer a base salary plus an additional bonus for signing a non-compete agreement. However, employers should not attempt to contract around these new salary requirements since Washington case law clearly favors employees on such issues. The courts will harshly punish an employer who attempts to deprive an employee of the protections and benefits of the new law; the employer may even be required to pay the employee’s attorney fees.
It’s best for employers who want to use non-compete agreements to disclose them prior the employee’s first day of work. After their first day of work an employee cannot be required to sign a non-compete without independent consideration, like a bonus, pay raise, promotion.
Employers and employees should take a close look at their existing non-compete agreements to see if they meet Washington’s new restrictions. If you think your non-compete agreement conflicts with the current laws, feel free to get in touch with our attorneys.