Governor Inslee signed a non-compete bill into law, which imposes new restrictions on non-compete agreements.
New Washington State Non-Compete Law: What is a non-compete agreement?
Under the law, a non-competition agreement is any written or oral agreement that prohibits an employee or independent contractor from “engaging in a lawful profession, trade, or business of any kind.”
New Washington State Non-Compete Law: How does this new law restrict non-compete agreements?
These restrictions are substantial and will likely require any business using a non-compete agreement to evaluate their agreements.
A few highlights under the new law, non-compete agreements will only be enforceable if:
An Employee earns more than $100,000 per year (this will be adjusted on a cost of living adjustment each year);
An independent contractor earns $250,000 or more from the Company seeking enforcing if the agreement;
The Employer discloses the terms of the non-compete when making an offer of employment (or earlier);
The Employer compensates Employees that are laid off, but still subject to a non-compete agreement;
The non-compete agreement does not cover a period of more than eighteen months.
For existing Employees who are asked to sign a non-compete, the Employer must provide consideration above and beyond continued employment.
New Washington State Non-Compete Law: What remedy is offered for a violation of this new law?
This new law also provides new remedies for violation. If a court or arbitrator determines that a covenant of a non-compete agreement violates this new law, the violator must pay the aggrieved person a penalty of $5,000 (plus attorney’s fees and costs) or actual damages (plus attorney’s fees and costs).
New Washington State Non-Compete Law: When does this new law go into effect?
The law goes into effect on January 1, 2020.
New Washington State Non-Compete Law: What might I do to prepare for this new law?
Many businesses use non-compete agreements and this new law will likely have an impact on these agreements and businesses’ ability to use them.
The attorneys at Leos & Gilkerson, PLLC advise on business issues and would be happy to discuss this new law with you, feel free to email or call us.
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