Understanding Washington State's Non-Compete Laws: Rights, Remedies, and Recent Amendments

Washington State has taken significant strides to regulate non-compete agreements, ensuring they are fair and just for workers. Chapter 49.62 RCW, which governs non-compete agreements, was recently amended through SB 5935, with changes effective from June 6, 2024. These amendments bring further clarity and restrictions to the use of non-compete clauses in employment contracts. Here’s a comprehensive look at the rights and remedies available to workers under this law, along with the key amendments enacted through SB 5935.

Rights of Workers under Chapter 49.62 RCW

**1. Income Thresholds: Non-compete agreements are only enforceable if the employee earns more than a specified income threshold. As of 2024, this threshold is adjusted annually for inflation. Workers earning below this threshold are not subject to enforceable non-compete agreements.

**2. Geographic Scope and Duration: Non-compete agreements must be reasonable in scope and duration. Generally, a non-compete that exceeds 18 months is considered unreasonable and unenforceable unless the employer can prove that a longer duration is necessary to protect business interests.

**3. Compensation for Non-Compete Period: If a worker is laid off and subjected to a non-compete agreement, the employer must compensate them for the restricted period, typically at their previous salary level.

**4. Disclosure Requirements: Employers must disclose the terms of the non-compete agreement in writing no later than the time of acceptance of the offer of employment. This ensures that employees are fully aware of the restrictions they are agreeing to.

**5. Civil Action: Employees can file a lawsuit to seek invalidation of an unreasonable non-compete agreement. If successful, the court can award damages, including actual damages, statutory damages of $5,000, and attorney's fees.

Key Amendments through SB 5935

The 2023-2024 legislative session brought notable changes to the non-compete statutes through SB 5935, effective June 6, 2024. Here are the critical amendments:

**1. Expanded Coverage: SB 5935 broadens the scope of employees covered under the law by adjusting income thresholds and refining definitions of key terms. This expansion ensures more workers are protected from unreasonable non-compete clauses.

**2. Narrowing Exceptions: SB 5935 now excepts nonsolicitation agreements only if they prohibit post-termination solicitation of current customers. Additionally, non-compete covenants entered into as part of the purchase of the goodwill or ownership of a business are only enforceable if the person signing the covenant purchases, sells, acquires, or disposes of at least a one-percent interest in the business.

Conclusion

Washington State’s Chapter 49.62 RCW, strengthened by the amendments in SB 5935, offers robust protections for workers against unreasonable non-compete agreements. These laws ensure that employees are not unfairly restricted from pursuing new employment opportunities while balancing the legitimate business interests of employers. The recent amendments underscore the state’s commitment to fairness and transparency in employment contracts, providing workers with the rights and remedies they deserve.

For more detailed information, you can review the statutory text of Chapter 49.62 RCW here and the full text of SB 5935 here.