Washington state has enacted Engrossed Substitute House Bill 1155 (ESHB 1155), which prohibits almost all post-employment noncompete agreements, effective June 30, 2027. The legislation makes most existing and future noncompete agreements void and unenforceable, regardless whether the status of the worker is employee or independent contractor, their salary level, the industry at issue, or the duration of the agreement.
Previously, Washington law banned noncompete agreements only for higher-earning workers; in 2026, the prohibition applied only to employees making about $126,859 per year and independent contractors making about $317,147 per year. The prior law also enacted strict guidelines for noncompete agreements, limiting most to one year. Now, employers must provide written notice to current and former workers no later than October 1, 2027, informing them that noncompete agreements are void and unenforceable. The blanket prohibition applies not just to traditional noncompete agreements, but to any contract provision that “threatens, demands, requires or otherwise effectuates” repayment, forfeiture, or loss of benefits for working in a profession or business.
One exception to the new state law is for noncompete agreements executed in the context of a business sale or the sale of its goodwill. However, the exception applies only if the individual subject to the noncompete acquires, disposes of, or otherwise changes ownership of an ownership interest of at least 1% in a business. The only other exception applies to franchise agreements.
The new state law also excludes nonsolicitation agreements from the definition of noncompete agreements. Still, customer nonsolicitation agreements are permissible only if the employee had a direct relationship with the customer. Nonsolicitation agreements also cannot last more than 18 months after the termination of the relationship. Furthermore, these agreements may not place a blanket ban on the acceptance of unsolicited business.
Additionally, the law does not affect confidentiality or trade-secret protection agreements. Training-repayment or educational-expense agreements also remain valid, provided they do not take the form of de facto noncompete agreements. For example, training-repayment agreements are limited to 18 months, must be prorated, and must include release provisions for good cause.
The new law also prohibits employers from enforcing, trying to enforce, or threatening to enforce noncompete agreements. Employers also may not represent that a noncompete agreement is valid or enter a new noncompete agreement after the effective date of the law. Potential remedies for violations include a penalty of $5,000 or actual damages, if greater, plus reasonable attorney’s fees and costs.
Washington joins Minnesota, North Dakota, and Oklahoma in passing an almost complete ban on noncompete agreements. Several other states, including Montana and Wyoming, have implemented laws with similar restrictions. In other states, such as Maine, Utah, and Virginia, lawmakers have tightened restrictions on noncompete agreements, especially for healthcare workers. Nonetheless, the Federal Trade Commission rejected the proposed nationwide ban on noncompete agreements and vacated the Noncompete Clause Rule last year.
Employers now face a patchwork of constantly changing state laws on noncompete agreements, particularly if they employ workers in multiple states. At this point, employers with workers in Washington should review their policies and procedures to ensure compliance with the new state law. Employers should prepare to distribute the required notices before October 1, 2027. They should also amend any agreements to include only legally valid nonsolicitation, confidentiality, and trade-secret protection provisions.
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