The Washington state legislature is currently considering a bill that would significantly impact an employer’s ability to use and enforce non-compete agreements with employees and independent contractors in nearly every profession, trade or business of any kind in the state. Key elements of the bill include:
Washington state’s annual average wage in 2017 was $61,900, so employees would need to earn more than $123,800 to have an enforceable non-compete; independent contractors would need to earn more than $247,600 for an enforceable non-compete;
(The language of the Substitute House Bill 1450 can be found here: http://lawfilesext.leg.wa.gov/biennium/2019-20/Pdf/Bills/House%20Bills/1450-S.pdf#page=1)
Non-compete agreements between an employer and a worker generally prevent workers from taking jobs with employer’s competitors for a certain period of time and in a defined geographic area. Employer advocates of non-competes use these agreements to protect business interests, while opponents argue that non-competes agreements stymie innovations and unfairly impede an individual’s ability to make a living.
Although the bill does not restrict the employer’s ability to use non-disclosure agreements, confidentiality agreements and non-solicitation agreements to provide a level of protection, the non-competition aspect will no longer be allowed in many cases.
We have heard from our members who have expressed concern about the bill in three particular areas:
While our members work hard to provide a positive workplace to retain talent, a few have shared situations where competitors had offered high salaries to attract an employee with the aim of gaining a strategic advantage against the employer. As such, having a reasonable non-compete is needed for many small businesses in our area.
We would encourage employers to share their thoughts with state representatives on this issue. Contact information for the House and Senate members can be found here:
https://app.leg.wa.gov/Rosters/MembersByDistrictAndCounties/House (Representatives Ricelli, Ormsby and Shea)
http://leg.wa.gov/Senate/Senators/Pages/default.aspx (Senator Andy Billig)
Senior Legal Counsel