On May 8, 2019, Washington Governor Jay Inslee signed into law a bill that prohibits employers from entering into noncompetition covenants with employees whose W-2 earnings are less than $100,000, and with independent contractors paid less than $250,000 per year.
In addition to the above, employers should be aware of the following five provisions in the new law:
- The law creates a presumption that any covenant longer than 18 months is unreasonable and unenforceable as a matter of law. A party to the covenant may rebut the presumption by showing through clear and convincing evidence that a duration longer than 18 months is necessary to protect the party’s business or goodwill.
- A covenant will be unenforceable unless the employer discloses its terms to a prospective employee in writing.
- If a covenant is entered into after employment begins, the employer must provide consideration in addition to employment to support the covenant.
- If an employee subject to a noncompetition covenant is terminated in a layoff, the covenant is void unless the employer pays the terminated employee base salary for the remainder of the covenant’s terms, less compensation earned through subsequent employment.
- If a court determines a noncompetition covenant violates the new law, the party seeking enforcement must pay the aggrieved person the greater of the actual damages or $5,000, plus reasonable attorneys’ fees and costs.
The new law will take effect January 1, 2020.
© Polsinelli PC, Polsinelli LLP in California.
This post was written by Cary Burke of Polsinelli PC.
Read more on Washington’s noncompete agreement law the National Law Review’s Labor and Employment page.
