New Limits on Non-Compete Agreements
Effective January 1, 2010, Washington state enacted stricter laws regarding the use and enforcement of non-competition agreements. These restrictions are a significant victory for employees. RCW 49.62 et seq., includes new provisions rendering non-competes void and unenforceable in various circumstances. For instance, a non-compete is void and unenforceable if the employee earns less than $100,000 per year. RCW 49.62.020(b). This earning amount must be adjusted for inflation meaning the minimum salary will increase in future years. RCW 49.62.040. Moreover, any non-competition agreement with a duration of more than 18 months is presumably unenforceable. RCW 49.62.020(2). In fact, the law now precludes enforcement of a non-compete if an employee is terminated as a result of a layoff. RCW 49.62.020((1)(c). The only exception is where the agreement pays the employee’s base salary from the termination date through the non-competition period. The new changes also provide protections for independent contractors. RCW 49.62.030.
Bottom line, these new protections for employees will likely limit the use and enforcement of non-competition agreements in the future. It will be difficult to enforce any non-compete that do not conform with these new provisions, the majority of which benefit employees. Notably, the changes are retroactive and apply to all actions initiated on or after January 1, 2010, regardless of when the cause of action arose. RCW 49.62.100. If you believe you may have signed a non-competition agreement, or have questions about the terms or conditions of your employment, it is advisable to contact an attorney to discuss your rights especially in light of this new law.