A common question I receive is whether noncompete agreements are legally binding for employees or independent contractors in Washington State. It surprises people when I say they are unenforceable unless you are paid over a certain amount every year!
What is a Noncompete?
Noncompete agreements can prevent employees from taking a job in a similar field they are currently working in for a set period of time after leaving the current employer. Sometimes this is limited to a geographic area, but sometimes the agreement will try to prevent the employee from taking a similar job anywhere. An example would be a noncompete preventing a teacher from accepting another teaching job within 50 miles for two years after leaving the employer school.
Employers like using noncompetes because it makes it harder for competing companies to poach talent and for employees to leave for better opportunities in the same industry. But for the same reasons that employers like implementing noncompete agreements, employees dislike them. A restrictive noncompete can make it difficult for an employee to take another job in the same industry without either leaving the geographic region or waiting until the noncompete expires after quitting their job.
Washington Law on Noncompetes
Washington State has imposed limitations on noncompete agreements, such as salary thresholds. Employers cannot enforce noncompete agreements against employees who they pay less than $116,593.18 in 2023. And noncompete agreements are unenforceable against independent contractors who the enforcing party pays less than $291,482.95 in 2023. Check with the Washington State Department of Labor & Industries every year for updated thresholds.
Additional limitations on noncompetes, which apply to employees who earn more than the income threshold, are listed below:
A potential employer must disclose any noncompete no later than the employee's offer acceptance.
A noncompete agreement is generally unenforceable against an employee if the employee is terminated as the result of a layoff (for it to be enforceable, the employer's severance package must compensate the employee through the noncompete's enforcement period at the employee's base salary (minus income the employee earns through subsequent employment during the noncompete period).
If an employer wishes to have an employee sign a noncompete agreement after the employee has already started working at the employer, the employer must provide compensation independent from the employee's regular salary/wages.
Employers are generally prohibited from preventing employees earning less than twice the Washington State minimum wage from having additional employment (subject to restrictions).
For more information on the limitations provided by Washington State, here are links to the relevant portions of the L&I website and the Revised Code of Washington. Feel free to schedule a meeting with me to discuss working together on your employment needs or contact me here!
The information provided on my blog is not legal advice and should not be relied on as legal advice. Anyone reviewing this post should use it as only a first step in understanding how a non-competition clauses and agreements work. You should consider consulting with a lawyer when drafting or reviewing an employment agreement.