Are Non-Compete Agreements Enforceable in Washington State?

All employers should consider having new hires sign a non-compete agreement as part of their onboarding process. Non-compete agreements are legal contracts designed to protect an employer's business interests by restricting former employees from working for a competitor or establishing a similar business in the same industry after their resignation or termination. And it does not end there.

According to the U.S. Department of the Treasury, a non-compete agreement can prohibit former employees from developing competing products, providing competing services, and recruiting former colleagues.

Are Non-Compete Agreements Enforceable in Washington State?

Several factors determine if a non-compete agreement is enforceable in Washington state, including the amount a former employee earned. According to the Washington State Department of Labor and Industries, and pursuant to RCW 49.62.020, employees must earn at least $126,858.83​ in a calendar year for a non-compete agreement to be enforceable. Under section RCW 49.62.030 of the Washington State code, an independent contractor must earn at least $317,147.09.

Additional Factors That Dictate Whether or Not a Non-Compete Agreement Is Enforceable in Washington State

Along with annual income requirements, employers must also show that a former employee's actions violate, disregard, or encroach on the following:

• Business relationships with established or prospective customers and clients
• Confidential business or professional information
• Specialized training
• Trade secrets

Time Limits and Geographical Area: The Role of Both in a Non-Compete Agreement

When it comes to duration and proximity, non-compete agreements have limitations. In Washington state, the legal framework governing restrictive covenants, limits non-compete agreement restrictions to 18 months after the termination of employment. Unless an employer can demonstrate why a longer duration is necessary to protect business interests, most courts will deem a non-compete exceeding 18 months unenforceable.

As far as geographical area is concerned, non-compete agreements are usually limited to areas where a former employee worked or where the employer has a legitimate business interest. That means it would be difficult to enforce a non-compete agreement if a former employee decides to work for or establish a competing business outside of the city or county where their previous employer is based.

Even if an employer could meet all other requirements, the following can make the geographic area restriction in a non-compete agreement unenforceable:

• No legitimate business interest - If a non-compete agreement does not specify tangible business interests; it will likely be deemed unenforceable. Examples of tangible interests include client lists, specialized training, and trade secrets.
• Not relevant to job role - If a former employee's job role did not involve trade secrets, managing clients, overseeing business operations, or other sensitive business interests, most Washington state courts will deem a non-compete unenforceable. And that makes sense since enforcing a blanket non-compete agreement that falls outside an employee's day-to-day duties would be unreasonable.
• Unfair and burdensome - If a non-compete agreement makes it so difficult for a former employee to find a job or start a business in the same industry as their previous employer that they would have to move, most courts will consider such an agreement unenforceable.
• Vague or generic language - If a non-compete agreement uses ambiguous terms in reference to specific cities, counties, or a radius that a past employee is not supposed to work or operate a business in, most courts will deem the agreement unenforceable.

To summarize, non-compete agreements can protect an employer's business interest when an employer-employee relationship ends. However, non-compete laws, can make enforcing such agreements challenging. As such, it is a good idea for Washington state employers to have an attorney draft a non-compete agreement, file a non-compete claim, or represent them in court if that becomes necessary.