Washington Bans Noncompete Agreements Beginning June 30, 2027

Key Takeaways

• Effective June 30, 2027, Washington will join a growing number of states that have banned noncompete agreements with few, limited exceptions.
• The limited exceptions include contracts related to the sale of a business, franchise agreements, and a few specific scenarios pertaining to nonsolicitation and private information.
• Washington employers will need to account for various effective dates and analyze how their employment and contracting agreements may need to change.

On March 23, 2026, Governor Bob Ferguson signed into law Engrossed Substitute House Bill 1155. The new law, which takes effect June 30, 2027, bans virtually all noncompete agreements with employees and independent contractors in Washington state. 

What Is Banned?

Washington law already restricts the use of noncompete agreements but allows employers to enter and enforce such agreements with high income earners and in certain other narrow circumstances. But beginning June 30, 2027, “all noncompetition covenants [will be] void and unenforceable, regardless of when the parties entered into the noncompetition covenant.” This is significant: All existing noncompete agreements will become void regardless of when they were signed.

The current law defines a “noncompetition covenant” as an agreement “by which an employee or independent contractor is prohibited or restrained from engaging in a lawful profession, trade, or business of any kind,” including agreements “that directly or indirectly prohibit[] the acceptance or transaction of business with a customer.” RCW 49.62.010(4). 

The new law broadens the definition of “noncompetition covenant” to also include: 

1. “[A]ny provision in an agreement that threatens, demands, [or] requires … an individual return, repay, or forfeit any right, benefit, or compensation,” because they engaged “in a lawful profession, trade, or business of any kind” and
2. “[A] covenant, agreement, or contract between a performer and a performance space, or a third party scheduling the performer for a performance space, that prohibits or restrains the performer from engaging in a lawful performance”

What Is Permitted?

The law preserves two exceptions to the general ban on noncompete agreements: 

• Contracts related to the sale of a business. The ban does not apply to agreements entered into by someone purchasing or selling the goodwill of a business or acquiring or disposing of an at least 1% ownership interest.
• Franchise agreements. The ban does not apply to an agreement entered into by a franchisee in connection with a franchise sale, provided the sale complies with RCW 19.100.020(1), which regulates such sales. 

The law also continues to permit other types of restrictive agreements under certain circumstances. Namely:

• Nonsolicitation agreements. Nonsolicitation agreements, as defined in the law, are still permissible, but HB 1155 now expressly limits their duration to no more than 18 months after the end of employment. Previously, employers could enforce nonsolicitation agreements that lasted longer than 18 months if the employer could prove the longer duration was necessary to protect their business or goodwill. The new law eliminates that exception.
  • Employee nonsolicitation agreements. The new law does not change the scope of permissible employee nonsolicits, which are still defined as agreements that prohibit solicitation “[o]f any employee of the employer to leave the employer.”
  • Customer, patient, or client nonsolicitation agreements. The new law revises the definition of permissible customer nonsolicits to include agreements that prohibit solicitation “of any current or prospective customer, patient, or client … if the employee established or substantially developed a direct relationship with the customer, patient, client, or prospect through the employee’s work for the employer.” This change walks back the 2024 amendment, which limited the definition of permissible nonsolicitation agreements to those barring solicitation of “current” customers, but imposes a new requirement that the covered customer, patient, or client have a preexisting relationship with the employee. The new law also clarifies that an agreement that “directly or indirectly prohibits the acceptance or transaction of business with a customer, patient, or client is not a nonsolicitation agreement” under the statute.
• Confidentiality/IP agreements. Importantly, the Legislature expressly recognized that businesses may still “protect intellectual property, trade secrets, and clients” under the new law. Certain agreements remain outside the scope of the law’s ban on “noncompetition covenants,” including confidentiality agreements and agreements that prohibit the disclosure of trade secrets or inventions.
• Educational expenses repayment agreements. The new law also expressly allows written agreements to repay out-of-pocket educational expenses if the agreement: (1) expires within 18 months of the employee’s start date; (2) limits repayment to the pro rata portion of the remaining time of the 18-month period; and (3) releases the employee from the obligation to repay if the employee’s separation from employment is based on “good cause” under RCW 50.20.05. 

Effective Date and Application

The new law takes effect June 30, 2027, and will apply to “all proceedings commenced on or after” that date. This includes legal proceedings initiated after June 30, 2027, even when the lawsuit is based on causes of actions that arose before that date.

Any suit filed before and still pending on June 30, 2027, will be governed by the current version of Washington’s noncompete law. 

A person “aggrieved” by a violation of the law has a private right of action to pursue actual damages or a statutory penalty of $5,000, plus attorneys’ fees and costs.

October 1, 2027, Notice Requirement 

The new law requires employers to “make reasonable efforts to provide written notice to all current and former employees and independent contractors whose noncompetition covenant is still within its effective time period, that their noncompetition covenant is void and unenforceable.” Employers must undertake efforts to provide this notice by October 1, 2027.

Next Steps for Employers

To prepare for implementation of Washington’s new noncompete ban, employers should consider the following steps:

• Review any template agreements used with employees and independent contractors to confirm that restrictive covenants comply with Washington law. This review should include repayment agreements.
• Identify current and former employees and independent contractors who will be subject to noncompete provisions on June 30, 2027.
• Prepare written notices in advance of the October 1, 2027, deadline stating that covered noncompetition covenants are void and unenforceable as of June 30, 2027.
• Review confidentiality, trade secret, and nonsolicitation provisions to confirm they protect legitimate business interests without crossing into conduct the statute now bars.

Bottom Line

Beginning June 30, 2027, employers should not enter or enforce noncompete agreements with employees and independent contractors. Employers may still use certain restrictive covenants and agreements designed to protect trade secrets and confidential information, but they should consult with counsel to confirm the terms of such agreements do not run afoul of Washington law.