On March 13, 2024, Governor Jay Inslee signed SSB 5935, a new law that modifies and expands the definition of noncompetition covenants (noncompete agreements). We intend to report on any other bills of interest to employers that are signed from the 2024 Washington legislative session in a future newsletter.
Beginning June 6, 2024, the definition of a noncompetition covenant includes an agreement that directly or indirectly prohibits the acceptance or transaction of business with a customer. Existing law voids a noncompetition covenant unless the employer describes the terms in writing no later than the worker’s acceptance of a job offer. The new bill clarifies that this refers to the worker’s “initial oral or written” acceptance of the offer. In addition, a noncompetition covenant entered into by an employee or independent contractor is void if the covenant allows or requires the application of any state law other than Washington’s. The law also limits the scope of a lawful nonsolicitation agreement to include only current customers.
Tips: We will update our Legal Guide, “Noncompetition Agreements” (3249). Be sure that you understand the issues surrounding noncompete and nonsolicitation covenants before you draft or implement them. To ensure you are applying the correct standards based on the circumstances of each new hire, you should consult with litigation counsel and ask them to draft a new agreement each time. When it comes to enforcement of existing agreements, your Vigilant Law Group employment attorney can help assess whether the agreement complies with the law, but your litigation counsel will be in the best position to help you strategize how to ensure your business interests are best protected under existing agreements.
