Any non-compete obligation requiring the enforcement of laws or jurisdiction other than Washington outside of Washington State will be void. Non-compete obligations exceeding 18 months after termination are considered inappropriate and unenforceable, except in rare cases. RCW 49.62, which came into force on January 1, 2020, imposes a number of significant restrictions on the content of the non-compete obligation and what the courts can apply to a former employee. Below are some of the main changes and limitations. Note: While the new non-compete clause exempts solicitation agreements, certain elements are usually contained in non-competition clauses that would likely have to be abolished so as not to be classified as a non-compete obligation. These include provisions that prevent departing employees from poaching potential customer business or accepting unsolicited customer deals. In 2019, Washington lawmakers passed a law that significantly limits non-compete obligations (“non-compete obligations”). While it is not clear how the courts will treat the law and interpret its meaning, it has significantly changed the way parties will argue and draft agreements in the future. Below are some general principles of non-competition as well as key concepts and legislative amendments under RCW 49.62 that came into force in 2020. The revised Non-Competition Act, which was passed on 1. It came into force in January 2020 and prohibits unfair non-compete obligations against low-wage workers by offering them a variety of new safeguards to unlock their economic potential.
An employer must independently consider an employee for an intermediate employment contract. This means that if an employer asks an employee to sign a non-compete obligation in the middle of the job or “mid-term”, “an independent audit is required at the time when non-compete commitments are made when the employment has already begun”. Labriola, 152 Wn.2d to 838. “Independent considerations may include higher salaries, promotion, bonus, a fixed period of employment, or perhaps access to protected information.” Id. at p. 834. In Labriola, the employee signed a non-compete obligation five years after the start of his work for the employer; he had signed another non-competition clause when he began his work. The subsequent agreement prohibited the employee from working for a competitor within 75 miles of the employer for a period of three years after the end of the employment relationship.
After the agreement was signed, Mr. Labriola remained an all-you-can-eat employee and received no additional benefits. Id. at p. 831. The Washington Supreme Court issued a summary judgment for Herr. Labriola, which considers that the non-compete obligation was not actually concluded because it was not supported by additional considerations. Id. at p. 842.
But the new non-compete obligation has an answer to that. The new law nullifies any non-compete obligation that requires an employee or independent contractor to decide on a non-compete code outside of Washington. It also invalidates any non-competition obligation that deprives an employee or an independent contract of the protection or benefits of this chapter. In fact, this provides for an 18-month period for non-compete obligations. The high burden of proof required to demonstrate the need for a longer non-compete obligation, combined with the uncertainty and costs of litigation, will discourage almost all employers from trying to include a longer non-compete obligation in the agreement. The law discourages this practice. This would be done by imposing a minimum damage of $5,000 (plus attorneys` fees and expenses) if a court or arbitrator reformed, rewrote, modified or only partially enforced a non-compete obligation. To avoid exposure to this type of liability, employers would likely apply less restrictive non-compete obligations, unless the circumstances actually require maximum restrictions. In recent years, the Washington legislature has shown a growing interest in crowding out the common law through non-compete obligations. Previous proposals would have restricted the application of non-compete obligations with employees in certain sectors and occupations (e.g.
B doctors) as well as with hourly, part-time or temporary workers. Previous proposals would also probably have made longer non-compete agreements inappropriate. Therefore, if the employee or independent contractor has reached less than these thresholds in the previous year, the non-compete obligation is null and void and unenforceable. Yes, but there are a few caveats. While the law invalidates any non-compete obligation signed before January 1, 2020, injured employees cannot sue their employer and recover the $5,000 penalty or damages for a non-compete obligation before 2020, unless the employer actively enforces the agreement. If an employer causes its employees or contractors to sign a non-compete clause that violates the new law after January 1, 2020, they can sue and receive financial compensation, whether or not it is enforced. No loopholes: Employees are protected from outside the state who seek to circumvent the new competition rules by cancelling any agreement that requires a Washington employee or contractor to enter into the agreement outside of Washington or that is not subject to the law. Workers who earn less than double the state`s current minimum hourly wage cannot be prevented from having additional employment, working as a self-employed contractor, or being self-employed. .