Do Non Compete Agreements Hold up in Washington State

Non-compete agreements have become increasingly common in many industries across the country and can be a hotly debated topic among employers and employees alike. In Washington State, the legality and enforceability of non-compete agreements have been a matter of discussion for many years. So, do non-compete agreements hold up in Washington State? Let’s take a closer look.

First, it is important to understand what a non-compete agreement is. A non-compete agreement is a legal document that restricts an employee from working for a competitor or starting a competing business for a specified period of time and within a specific geographic area. These agreements are often used by employers to protect their trade secrets, confidential information, and client relationships.

In 2019, Washington State passed a new law regulating the use of non-compete agreements. The law now prohibits non-compete agreements for employees who earn less than $100,000 annually or independent contractors who earn less than $250,000 annually. Additionally, the law requires employers to provide employees with a copy of the non-compete agreement before making a job offer, and the agreement must be disclosed in writing at least two weeks before the employee begins work.

It’s important to note that although the law places some restrictions on non-compete agreements, it does not prohibit them entirely. If an employee or contractor is earning above the stated income thresholds, the employer can still require them to sign a non-compete agreement. However, the law also states that non-compete agreements must be reasonable in terms of duration, geographic scope, and industry.

So, what makes a non-compete agreement “reasonable” in Washington State? The duration of a non-compete agreement should be limited to the time necessary to protect the employer’s legitimate business interests, such as trade secrets or customer relationships. Generally, courts in Washington State have found that non-compete agreements lasting longer than one year may be considered unreasonable.

The geographic scope of a non-compete agreement should also be limited. The agreement should only restrict the employee from working in a specific geographic area where the employer has a legitimate business interest to protect. For example, an employer in Seattle may have a legitimate interest in restricting an employee from working for a competitor located in the same city.

Finally, the industry should be considered when determining the reasonableness of a non-compete agreement. A non-compete agreement that restricts an employee from working in any industry may be considered unreasonable. The agreement must be tailored to restrict the employee from working only in a specific industry where the employer has a legitimate interest to protect.

In conclusion, non-compete agreements can hold up in Washington State, but they must be reasonable in terms of their duration, geographic scope, and industry restrictions. The recent law has placed some restrictions on the use of non-compete agreements, but they are still legal in some circumstances. Employers and employees should consult with legal professionals to ensure that any non-compete agreement they enter into is reasonable and enforceable in Washington State.