Non-compete agreements, also known as restrictive covenants, are contracts that are widely used by employers to protect their business interests and confidential information. These agreements prohibit an employee from working for a competitor or starting a competing business for a certain period of time after leaving their current employment. The use of non-compete agreements has become a topic of controversy and debate in many states, including Washington.
Washington state law governing non-compete agreements has undergone several revisions in recent years. In May 2019, Governor Jay Inslee signed a bill that strengthened the state`s restrictions on non-competes. The new law, which became effective on January 1, 2020, requires employers to pay their employees additional compensation if they want to enforce non-compete agreements. The law also limits the use of non-competes to specific industries and job classifications.
Under the new law, non-compete agreements are only enforceable against employees who earn more than $100,000 per year or independent contractors who earn more than $250,000 per year. The agreement must also be reasonable in terms of duration and geographic scope. Non-competes for employees who are laid off or terminated without cause are not enforceable.
The new law prohibits the use of non-compete agreements for certain types of workers, including employees who work in construction, the extraction industry, and home health services. It also prohibits non-competes for employees who are seasonal or temporary workers, students enrolled in an internship program, or employees who are laid off due to a business downturn.
Non-compete agreements in Washington state are enforceable only if they meet the requirements of the new law. Employers who fail to comply with the law may be liable for damages and attorney fees.
In conclusion, non-compete agreements are enforceable in Washington state but only under specific circumstances. The new law has made it more difficult for employers to use non-competes to restrict their employees` mobility. Employees who are asked to sign a non-compete agreement should consult with an attorney to understand their rights and obligations. Employers who wish to use non-compete agreements should ensure that their agreements comply with the new law to avoid legal consequences.