Washington Non-Compete Agreements: Enforceability and the 2027 Ban

Washington settles the enforceability question by statute rather than case-by-case reasonableness. Chapter 49.62 RCW, in force since January 1, 2020, sets an earnings floor, a presumptive duration limit, disclosure timing rules, and a statutory penalty against employers that overreach. This article sits inside the broader Washington labor laws reference and covers what makes a covenant enforceable now, which agreements fall outside the definition, and what changes at the ban date.

What makes a Washington non-compete enforceable

The chapter treats a noncompetition covenant as void unless every condition in RCW 49.62.020 is met. The conditions are cumulative. A covenant that clears the earnings floor is still void if the employer disclosed it too late, and a properly disclosed covenant is still void if the worker earns too little.

1. Compare annualized earnings against the current threshold

   RCW 49.62.020(1)(b) voids a covenant unless the employee’s earnings from the party seeking enforcement, when annualized, exceed one hundred thousand dollars per year. That base figure is adjusted for inflation every year, and the Department of Labor & Industries put the 2026 employee figure at $126,858.83. Earnings are measured as of the earlier of the date enforcement is sought or the date of separation from employment.

2. Check when the covenant was disclosed

   The employer must disclose the terms of the covenant in writing no later than the time of the initial oral or written acceptance of the offer of employment. Where a covenant would become enforceable only later because the worker’s pay rises past the threshold, RCW 49.62.020(1)(a)(i) requires the employer to say specifically that the agreement may be enforceable in the future. A covenant handed over after the offer was accepted fails this test.

3. Check what the worker received for signing

   A covenant entered into after employment has already started is void unless the employer provides independent consideration for it. Continued employment by itself is not the consideration the statute calls for; the employer has to give something additional at the time of signing.

4. Check the duration

   A court or arbitrator must presume that a covenant lasting more than eighteen months after termination is unreasonable and unenforceable. The party seeking enforcement can rebut that presumption only by clear and convincing evidence that a longer term is necessary to protect its business or goodwill.

5. Check whether the separation was a layoff

   Where the employee is terminated as the result of a layoff, the covenant is void unless enforcement includes compensation equivalent to the employee’s base salary at the time of termination for the whole period of enforcement, minus whatever the employee earns through subsequent employment during that period. An employer that lays a worker off and then wants the covenant honored has to pay for the quiet period.

The separation itself is governed elsewhere. Washington’s default rule lets an employer end an indefinite employment relationship without cause, subject to the exceptions collected in is Washington an at-will employment state, and the timing of the last wage payment follows Washington final paycheck law rather than anything in chapter 49.62 RCW. The layoff-pay condition is a separate obligation that runs through the restricted period long after the final check has cleared.

The 2026 earnings thresholds and how they are set

Two separate floors apply. The employee floor sits in RCW 49.62.020(1)(b) at a statutory base of one hundred thousand dollars. The independent contractor floor sits in RCW 49.62.030 at a base of two hundred fifty thousand dollars. Neither base number is the operative figure in any given year, because both are indexed.

RCW 49.62.040 directs the Department of Labor & Industries to recalculate both amounts each year on September 30, using the consumer price index for urban wage earners and clerical workers (CPI-W) for the twelve months before September 1. The adjusted amount takes effect the following January 1. L&I publishes the running table of non-compete earnings thresholds: as of 2026, $126,858.83 for employees and $317,147.09 for independent contractors, up from $123,394.17 and $308,485.43 in 2025.

What counts as “earnings” is narrower than total compensation. RCW 49.62.010(1) defines it as the compensation reflected in box one of the employee’s IRS Form W-2 paid over the prior year, or the portion of the year the person was employed, annualized. For independent contractors the measure is payments reported on Form 1099-MISC. Because the figure is annualized, a worker who separates in March is measured on what a full year at that rate would have produced, not on three months of actual pay.

One category has its own hard cap. Under RCW 49.62.030(2), a non-compete between a performer and a performance space, or a third party scheduling the performer for that space, must not exceed three calendar days.

Agreements chapter 49.62 RCW does not count as non-competes

The definition in RCW 49.62.010(4) is broad at the front and then carved back. It reaches every written or oral covenant that prohibits or restrains a worker from engaging in a lawful profession, trade, or business, and it expressly reaches an agreement that directly or indirectly prohibits accepting or transacting business with a customer. That last clause arrived with the 2024 amendment and closed a common workaround: a customer-business ban is a non-compete no matter what heading sits at the top of the page.

Five categories sit outside the definition under RCW 49.62.010(4):

• A nonsolicitation agreement
• A confidentiality agreement
• A covenant prohibiting use or disclosure of trade secrets or inventions
• A covenant signed by someone buying or selling the goodwill of a business, or acquiring or disposing of an ownership interest, but only where that interest represents one percent or more of the business
• A covenant signed by a franchisee where the franchise sale complies with RCW 19.100.020(1)

“Nonsolicitation agreement” carries a statutory meaning too. Under RCW 49.62.010(5) it covers an agreement barring a departing employee from soliciting the employer’s other employees to leave, or soliciting current customers to cease or reduce their business. An agreement that goes further and bars the worker from doing business with those customers at all is a non-compete subject to the earnings floor.

Franchise no-poach rules and the right to a second job

Two related prohibitions in the same chapter apply without regard to earnings.

RCW 49.62.060 bars a franchisor from restricting, restraining, or prohibiting a franchisee from soliciting or hiring an employee of another franchisee of the same franchisor, or an employee of the franchisor itself. No-poach terms of that kind in franchise agreements are unenforceable in Washington.

RCW 49.62.070 protects second jobs at the lower end of the wage scale. An employer may not restrict an employee earning less than twice the applicable state minimum hourly wage from taking an additional job, working for another employer, working as an independent contractor, or being self-employed. Two limits apply. The protection does not reach additional work that raises safety issues for the employee, coworkers, or the public, or that interferes with the employer’s reasonable and normal scheduling expectations. The section also leaves the common-law duty of loyalty and conflict-of-interest rules untouched.

Out-of-state clauses and what an unlawful covenant costs

Employers sometimes route enforcement through a friendlier state. RCW 49.62.050 closes that route for a Washington-based employee or independent contractor. A provision is void if it requires the worker to litigate the covenant outside Washington, to the extent it strips away the chapter’s protections, or if it calls for the law of another jurisdiction to apply.

The remedy is fixed by statute. Under RCW 49.62.080, a violator must pay the aggrieved person the greater of actual damages or a statutory penalty of five thousand dollars, plus reasonable attorneys’ fees, expenses, and costs. The same payment is owed where a court or arbitrator reforms, rewrites, modifies, or only partially enforces the covenant, so trimming an overbroad covenant down to a lawful size does not spare the employer the penalty. The Attorney General may also pursue relief on behalf of a person or a group of people, and its Antitrust Division maintains a page on labor and antitrust enforcement that covers non-compete complaints.

One timing limit applies to older paper. RCW 49.62.080(4) bars a cause of action over a covenant signed before January 1, 2020 unless that covenant is being enforced or explicitly leveraged.

The statewide ban taking effect June 30, 2027

Washington enacted a full ban in 2026. Under 2026 c 149, Substitute House Bill 1155, all noncompetition covenants become void and unenforceable on June 30, 2027, regardless of when the parties entered into them. The earnings thresholds, the eighteen-month presumption, and the layoff-pay rule stop doing any work on that date, because nothing survives for them to filter.

The amended RCW 49.62.020 also makes conduct itself a violation. From the ban date forward it is unlawful for an employer to enforce a covenant, attempt to enforce it, threaten to enforce it, represent that a worker is subject to one, or enter into one.

Nonsolicitation agreements survive the ban in narrowed form. The amended definition in RCW 49.62.010 limits them to customers, patients, or clients with whom the employee established or substantially developed a direct relationship through the work, and requires the restriction to expire no later than eighteen months after termination. Agreements to repay out-of-pocket educational expenses stay outside the non-compete definition only where they expire within eighteen months of the start date, cap repayment at the pro rata share of the remaining time, and release the worker where the separation was for “good cause” under RCW 50.20.050.

Cases already underway follow the older rules. RCW 49.62.100 provides that proceedings commenced before June 30, 2027 are governed by the chapter as it read before that date, while proceedings commenced on or after that date fall under the ban regardless of when the cause of action arose.