In addition to June’s longer days and warmer weather, the end of June next year will mark the beginning of a new chapter for Washington non-compete agreements. Washington Engrossed Substitute House Bill 1155 (ESHB 1155), which takes effect on June 30, 2027, significantly changes the legal landscape for both noncompete agreements and nonsolicitation agreements in Washington. Generally speaking, non-compete agreements will be banned in Washington, while nonsolicitation agreements will still be allowed under narrow circumstances.
The engrossed bill carves out six exceptions to the definition of what constitutes a banned non-compete agreement:
- A nonsolicitation agreement;
- A confidentiality agreement;
- A covenant prohibiting use or disclosure of trade secrets or inventions;
- An agreement related to the purchase or sale of at least one percent of a business;
- A covenant entered into by a franchisee when the sale complies with RCW 19.100.020(1); and
- An agreement to repay out-of-pocket educational expenses so long as certain conditions are met.
Nonsolicitation agreements are still allowed, so long as those agreements meet the strict criteria outlined in the engrossed bill. Broadly, that includes agreements prohibiting an employee from:
- Soliciting other employees of the employer to leave the employer; and
- Soliciting the employer’s current or prospective customers, patients, or clients of the employer for 18 months after the termination of employment.
Are you a business owner who has questions about the validity of any non-compete or nonsolicitation agreements you may have in place? If so, please let us know. We’d be happy to help.
Phone: (206) 784-5305
