Is Your Non-Compete Agreement Enforceable?

pen image - new requirements to enforce your non-competition agreement

If your company has a non-competition agreement, read on for big news! Washington has recently passed a new law that limits the enforcement of these agreements.

A Bit of Background

Non-competition agreements are designed to keep employees with sensitive and/or proprietary knowledge from taking similar jobs at other companies. They’re a hot-button issue in regions with a multitude of tech firms; many argue that they stifle innovation and individual freedom. California has gone so far as to ban them entirely.

While still legal in Washington, a new state law imposes new standards that non-compete agreements must meet in order to be upheld in court. Let’s look at three of the new requirements that must be met in order for agreements to be enforceable after the law takes effect on 01/01/2020:

WAGE LIMIT
The employee’s annual W2 earnings must be less than $100,000 ($250,000 for independent contractors).2

DURATION
The agreement can’t be for more than 18 months, with few exceptions.

DISCLOSURE
The terms of the agreement need to be shared in writing before or at the time that the worker accepts the offer of employment.

These are only a few of the new restrictions. Next week, we’ll dive into the others in the second part of our post. 

Get help with your non-competition agreements

Are you sure your non-competition agreements are in compliance? If you want some help bringing them up to snuff, contact me to book an appointment.

Written by Mark Jordan

 


1This law applies to non-competition agreements, defined as any written or oral agreement that prohibits a worker (or independent contractor) from “engaging in a lawful profession, trade, or business of any kind.” It does not apply to non-solicitation agreements that prevent ex-employees from soliciting away their former employer’s clients.

2This amount will be adjusted annually for inflation.