By Daniel Saeedi, Rachel L. Schaller
Jan. 22, 2020
Washington state employers now must comply with one of the strictest noncompete laws in the country, which the Legislature determined will apply retroactively to restrictive covenants entered into before Jan. 1, 2020.
Washington House Bill 1450 declares that noncompetes are unenforceable against employees who make less than $100,000 a year (and in the case of independent contractors, $250,000 a year). The law also requires significant disclosures to be made to the employee at the time they sign the noncompete — the absence of which could also invalidate the clause.
The law requires compensation to be paid to the employee during the period that it will be enforced at a rate not less than the employee’s previous salary, minus any compensation earned through subsequent employment during the period of enforcement.
Further, noncompetes lasting longer than 18 months are presumptively void. Under the law, any attempt by an employer to noncompetes against Washington employees or independent contractors in another state (i.e., through a forum clause) will render the covenant unenforceable.
Finally, the law states that in the case of a noncompete being declared unenforceable or enforceable in part or as modified, the party seeking enforcement must pay the aggrieved person the greater of actual damages suffered or a $5,000 penalty, plus reasonable attorney’s fees and costs.
IMPACT: Employers should be aware of any state restrictive covenant laws that may impact portions of the workforce.
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