Washington State Bans Almost All Noncompetes

Washington state has joined a growing list of states banning almost all noncompetes between employers and employees and independent contractors.

As we previously reported, the Washington State legislature introduced HB1155 earlier this year.  On March 23, 2026, Governor Bob Ferguson signed into law Engrossed Substitute House Bill 1155 (the “Act”) that effectively bans almost all noncompetes for Washington-based employees and independent contractors.

Effective Date and Retroactive Effect

The Act will become effective June 30, 2027 and will apply retroactively.  Therefore, on June 30, 2027, “all noncompetition covenants are void and unenforceable regardless of when the parties entered into the noncompetition covenant.”  However, legal proceedings that were already filed before June 30, 2027 will be governed by the prior version of the law. 

What Agreements Will Be Prohibited?

Under the Act, all noncompetition covenants between and employer and employee or independent contractor will be prohibited.  Noncompetition covenants include oral or written agreements that:

• prohibit or restrain an employee or independent contractor from engaging in a lawful profession, trade or business;
• directly or indirectly prohibit the acceptance or transaction of business with a customer;
• contain a forfeiture-for-competition provision that requires or threatens that an individual must return, repay, or forfeit any right as a consequence of the individual engaging in a lawful profession, trade or business; or
• prohibit or restrain a performer from engaging in a lawful performance (when set forth in an agreement between the performer and a performance space, or a third party scheduling the performer for a performance space)

The Act does not include exceptions for highly paid employees, so any noncompete between an employer and employee will be prohibited as of June 30, 2027.  The prohibition against the acceptance or transaction of business with a customer means that some customer non-solicitation provisions will be prohibited, and as discussed below, must be narrowly tailored pursuant to the requirements of the Act.

What Agreements Are Permitted?

The Act sets forth the types of agreements that are permitted because they do not qualify as noncompetes, including:

• confidentiality agreements;
• covenants prohibiting the use or disclosure of trade secrets or inventions;
• noncompetes entered into as a result of the sale of a business, provided that the person signing the covenant purchases, sells, acquires, or disposes of an ownership interest representing one percent or more of the business;
• covenants entered into by a franchisee;
• a written agreement to repay out-of-pocket educational expenses if the agreement (i) expires within 18 months of the employee’s start date; (ii) limits repayment to the pro rata portion of the remaining time of the 18-month period; (iii) releases the employee from the obligation to repay if the employee’s separation from employment is based on “good cause” under RCW 50.20.050; or
• a non-solicitation agreement.

The Act defines a non-solicitation agreement as an agreement between an employer and employee that prohibits solicitation by an employee, upon termination of employment: (a) of any employee of the employer to leave the employer, or (b) of any current or prospective customer, patient, or client of the employer to shift business away from the employer “if the employee established or substantially developed a direct relationship with the customer, patient, client, or prospect through the employee’s work for the employer and the prohibition expires no later than 18 months following termination of employment.”  

Beginning June 30, 2027, the following will apply in Washington:

• Noncompetes with employees or independent contractor are unenforceable;
• Broad customer non-solicitation provisions that prohibit the employee from accepting or transacting business with a customer, patient or client are unenforceable;
• Narrowly tailored customer non-solicitation provisions that prohibit the employee from soliciting any current or prospective customer, patient, or client of the employer to shift business away from the employer “if the employee established or substantially developed a direct relationship with the customer, patient, client, or prospect through the employee’s work for the employer” are enforceable, provided that the restrictions are limited to 18 months after termination of employment;
• Employee-non-solicitation provisions are enforceable;
• Confidentiality provisions and covenants prohibiting the use or disclosure of trade secrets or inventions are enforceable; and
• Noncompetes in connection with the purchase or sale of a business are enforceable.

Notice Required

Pursuant to the Act, all employers are required to “make reasonable efforts to provide written notice to all current and former employees and independent contractors whose noncompetition covenant is still within its effective time period, that their noncompetition covenant is void and unenforceable.”  The Act requires that the written notice be provided to such current and former employees and independent contractors by October 1, 2027. 

Violations of the Act

Pursuant to the Act, if a court or arbitrator determines that a person violates the Act, the violator “must pay the aggrieved person the greater of his or her actual damages or a statutory penalty” of $5,000, plus reasonable attorney’s fees, expenses and costs.  In addition, an aggrieved person may bring a cause of action for relief, and the attorney general may also pursue any and all relief.

Conclusion and Next Steps

Washington has now joined a small (but increasing) number of states that prohibit noncompetes.  The states that prohibit noncompetes include California, Minnesota, Oklahoma, North Dakota, and now Washington.  Washington allows narrowly tailored customer non-solicitation provisions and permits employee non-solicitation provisions. 

While it may seem that with the June 30, 2027 effective date that no immediate action is required, it is recommended that employers begin to prepare for the Washington Act in 2026.  In 2026, employers should review their current agreements and offer letters for Washington employees and consider making revisions to those documents now.  Employers should work with counsel to develop agreements that will comply with the requirements of the Act.  Finally, employers should begin the process of identifying employees and former employers who will need to receive written notice by October 1, 2027.