On March 23, 2026, Governor Bob Ferguson signed SHB 1155, a new law that bans noncompetition covenants (agreements) and clarifies nonsolicitation agreements in Washington.
Beginning on June 30, 2027, all noncompete agreements are considered void and unenforceable, regardless of when they were signed. This is significant since the ban applies retroactively and voids all existing noncompete agreements for Washington-based employees. Here are the key takeaways of the new law:
- Exclusions: The new bill doesn’t apply to nonsolicitation agreements, confidentiality and trade secret agreements, franchisee agreements, sale of business agreements, and a newly excluded category of educational expense repayment agreements. These types of agreements are still valid and permissible. In addition, any legal proceedings that were already filed before the effective date will be governed by the prior version of the law, which we previously reported on.
- Educational/Training Expense Repayment Agreement Exclusion: A written agreement to repay out-of-pocket educational expenses is acceptable under the new law if the agreement: (1) expires within 18 months of the employee’s hire date; (2) limits repayment to a pro rata portion of the time remaining in those 18 months; and (3) releases the employee from the duty to repay if the employee’s separation from employment is based on “good cause” under the unemployment benefits statute at RCW 50.20.050.
- Nonsolicitation Agreements: Even though the bill doesn’t prohibit nonsolicitation agreements, it still requires the definition of nonsolicitation to be “narrowly construed.” The bill retains existing language that you may prohibit former employees from soliciting current employees. You may also still prohibit former employees from soliciting customers, with some changes. The new bill expands the existing ability to prohibit solicitation of current customers to also include prospective customers (as well as “clients” and “patients”), and describes the action that can be restricted as an attempt to solicit business away from the employer. However, in order to prohibit solicitation of current or prospective customers: (1) the employee must have established or substantially developed a relationship with the customer through their work for the employer; and (2) the prohibition on solicitation cannot last more than 18 months after the employee’s separation from employment. In addition, any agreement that directly or indirectly prohibits a worker from accepting business from a customer is treated as a prohibited noncompete agreement, not a valid nonsolicitation agreement.
- Expanded Definition of Noncompete Agreements: The bill adds more language defining an unlawful noncompete agreement to include “any provision in an agreement that threatens, demands, requires, or otherwise effectuates that an individual return, repay, or forfeit any right, benefit, or compensation, as a consequence of the individual engaging in a lawful profession, trade, or business of any kind.” For example, a separation agreement will be void if it says that the departing employee must return a severance payment or bonus if they land a job with a competitor.
- Employer Notice Requirements: By October 1, 2027, you are required to make “reasonable efforts” to provide written notice to all current and former employees and independent contractors with noncompetition agreements that those agreements are void and unenforceable. The notice is only required for those individuals whose noncompetition agreement is still within the effective time period spelled out in the agreement.
Tips: We will update our Legal Guide, Noncompetition Agreements. You should conduct a review of all restrictive covenants for employees, including noncompete agreements, nonsolicitation agreements, confidentiality and trade secret agreements, and educational/bonus repayment programs. While noncompete agreements are banned, you can still protect your business interests through other policies that emphasize confidentiality and via nonsolicitation agreements that are narrowly tailored within the bounds of the new law. Members: contact your Vigilant Law Group employment attorney to help assess whether your policies comply with the law.
