Washington recently passed the Act Relating to Restraints, Including Noncompetition Covenants, on Persons Engaging in Lawful Professions, Trades or Businesses, which shall be effective from January 1, 2020. The Act was introduced with the intent that there ought to be workforce mobility which is vital to the economic growth and development of the state. It seeks to protect employees from unreasonable non-compete clauses in their employment agreements. Non-compete clause signed by employees earning less than US $100,000 and independent contractors earning less than US $250,000 annually will be unenforceable once the Act is effective. Further, agreements wherein the non-compete provision are applicable for a duration exceeding 18 months will also become unenforceable.

It is noteworthy that the definition of a "Noncompetition covenant" includes written as well as oral covenants, agreements, or contracts with employees or independent contractors. The Act also requires the employer to disclose the non-compete provision before/ at the stage of acceptance of the employment offer by the employee.

The most vital function of a non-compete clause is to protect the trade secrets, intellectual property, proprietary information, clientele, etc. from being solicited by the competitor through unlawful means. The Act still grants this protection since the definition of a 'non-competition covenant' specifically excludes agreement/ covenants relating to non-solicitation, confidentiality, prohibiting use or disclosure of trade secrets or inventions, purchasing or selling the goodwill of a business, etc.

Compiled by: Adv. Sachi Kapoor | Concept & Edited by: Dr. Mohan Dewan

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