Washington Bans Nearly All Noncompete Agreements

On March 23, 2026, Governor Bob Ferguson signed Engrossed Substitute House Bill 1155 into law, banning nearly all employment noncompetition agreements for Washington-based workers, including employees and independent contractors. The law becomes effective June 30, 2027.

The implications are immediate and significant. Employers will face increased workforce mobility, higher costs associated with recruiting and training talent, greater risk of theft of intellectual property, and disruption to client relationships.

Without noncompete agreements, safeguarding core business interests becomes significantly more challenging. Companies should act quickly to strengthen alternative safeguards—particularly stakeholder confidentiality and nonsolicitation agreements—and adopt practical risk-mitigation strategies. These include limiting access to sensitive information on a need-to-know basis, implementing technological safeguards such as access controls and monitoring systems, conducting thorough onboarding and exit processes, and reinforcing clear expectations around post-employment conduct within legal limits.

This is not a routine legal update—it's a tectonic shift to the landscape of how employers maintain their market standing by protecting their workforce, proprietary information, and customer relationships.

Key Takeaways

• All noncompetes—past and future—will be void.
• Employers cannot enforce, threaten, or even suggest a noncompete applies.
• The law applies broadly to employees, independent contractors, and performers.
• Certain compensation arrangements that require "stay or pay," repayment, or forfeiture may also be treated as noncompetes.
• Employers must notify current and former workers that existing noncompetes are unenforceable by October 1, 2027.
• Lawsuits filed before June 30, 2027, will not be affected by the new amendments.

Bottom line: Noncompetes are going away, and employers will need a new playbook.

From "Regulate" to "Eliminate"

Washington becomes the seventh state to adopt a near-total employment noncompete ban, alongside California, Minnesota, Montana, North Dakota, Oklahoma, and Wyoming.

Washington had been tightening restrictions on employment noncompete agreements for several years. In 2020, Washington took its first significant step toward tightly regulating noncompete and nonsolicitation agreements by enacting RCW 49.62. The statute defined noncompetes as restraints on lawful work and imposed key limitations, including salary thresholds that individuals must meet for a noncompete agreement to be enforceable, requirements that noncompete terms be disclosed to employees before the start of employment to be enforceable, limits on the permissible duration of enforceable noncompete agreements, and a "garden leave" provision requiring employers to pay base salary during enforceable periods following a layoff. It also clarified that customer nonsolicitation agreements were permissible if limited to restricting solicitation of customers to stop or reduce business, and prohibited employers from preventing lower-wage employees from working additional jobs.

The statute was further amended in 2024 to more tightly regulate and restrict the use of noncompete and nonsolicitation agreements. The amendments broadened the definitions to capture as "noncompetes" any provisions that directly or indirectly limit an employee's ability to work with customers, required advance written disclosure of such agreements and independent consideration beyond continued employment, raised salary thresholds, narrowed permissible nonsolicitation agreements to current customers only, and imposed additional limitations on enforceability.

A 2025 decision by the Washington Supreme Court, David v. Freedom Vans LLC, also tightened the rules of play for noncompetes. Employers could no longer rely on a general "duty of loyalty" to justify broad noncompetes. Instead, noncompetes had to be narrow and reasonable, taking into consideration factors such as the employer's business or goodwill, whether the restraint on the employee was reasonably necessary, and if enforcing the noncompete violated public policy.

HB 1155 takes a different approach: instead of refining the rules, it replaces them with a categorical ban.

The legislature's findings contend that noncompetition covenants hinder innovation and entrepreneurship, limit job mobility, suppress wages, and harm consumers. The legislature cites to the Federal Trade Commission's 2024 rule banning noncompete agreements—later vacated by a federal court as unlawful under the FTC Act—and asserts Washington's prior restrictions on agreements did not go far enough. Setting aside the possibility that companies may simply shift operations to states with more favorable business climates and stronger protections for competitive advantage and intellectual property, the findings close with a call for other states to join Washington in banning employee noncompetition covenants: "Let the actions of this legislature to improve prosperity for all pave the way for the nation."   

What the Law Actually Prohibits

The statute is clear:

"All noncompetition covenants are void and unenforceable regardless of when the parties entered into the noncompetition covenant."

Employers may not:

• Enter noncompetes
• Enforce or attempt to enforce them
• Threaten enforcement
• Represent that a worker is subject to one

Just as important, the law expands what counts as a "noncompetition covenant."

It now includes any agreement that restrains someone from working, such as:

• Restrictions on joining a competitor
• Limits on accepting or doing business with customers
• Provisions requiring workers to repay or forfeit compensation if they take another job

That last point is worth emphasizing. Commonplace contract terms regarding employee compensation, including equity forfeiture clauses, bonus claw backs, and sign-on and retention-based repayment provisions may be unenforceable if they are tied to post-employment competition.

In practical terms: if a provision discourages an employee from leaving for a competitor, it may be treated as a noncompete—regardless of how it is labeled.

What Still Works (But Only if Narrow)

The law leaves some room for certain protections, but only if they are carefully drafted.

Noncompetes tied to the sale of a business remain valid—but only where the individual holds at least a 1% ownership interest. Noncompetes tied to franchise sales between franchisees are also still allowed. A franchise offer counts as being made in this state if it is sent to or from the state, received here, involves a state resident, or relates to a business operating here.

Nonsolicitation agreements remain permissible, but must be limited to:

• Active solicitation (as opposed to accepting or transacting business, which is interpreted as a noncompete)
• Of a "current or prospective customer, patient, or client"
• With whom the employee "established or substantially developed a direct relationship" through their work
• For a maximum post-employment restricted period of 18 months

Confidentiality agreements and trade secret protections remain fully enforceable and will play a central role going forward in Washington.

Training repayment agreements are also allowed, but only if they are narrowly structured: limited to actual costs, prorated over time, capped at 18 months of the employee's start date, and waived if the employee leaves for good cause.

Notice Requirements, Enforcement Risk, and Statutory Penalties of $5,000

The law also creates new compliance obligations and the risk of steep penalties.

By October 1, 2027, employers must make reasonable efforts to notify current and former workers who are still within the term of a noncompete (or certain repayment provisions) that those provisions are void and unenforceable.

Enforcement risk is real. The Washington Attorney General may bring claims, and workers may sue directly. Employers face liability for the greater amount of actual damages or $5,000, plus attorney fees and costs.

Importantly, liability does not require a lawsuit—attempting to enforce or even suggesting a noncompete still applies may be enough.

What This Means in Practice

For many employers, this will require a shift in strategy, policies, and documentation.

Technology companies should anticipate increased movement of engineers and executives between competitors and startups, along with closer scrutiny of equity forfeiture and retention-based compensation structures. Protecting proprietary information will depend more heavily on confidentiality agreements, internal controls, and trade secret enforcement.

Healthcare organizations may see greater mobility among physicians and other providers, particularly in competitive markets. While patient nonsolicitation provisions remain possible, restrictions that effectively prevent providers from continuing to treat patients may be vulnerable if they are viewed as limiting the acceptance of business.

Across industries, employers will need to rely more on:

• Strong confidentiality and trade secret protections but which are carefully tailored to avoid running afoul of Washington's Equal Pay and Opportunities Act and Silenced No More Act (which protect employee disclosures regarding specific terms and conditions of employment such as wages and conduct reasonably believed to be illegal as defined by the statutes)
• Narrow, enforceable nonsolicitation provisions
• Compensation and workplace strategies that encourage employees to stay
• Practical measures to safeguard sensitive information by limiting access on a need-to-know basis, deploying technological protections, conducting thorough onboarding and exit interviews, and clearly reinforcing post-employment obligations

What Employers Should Do Now

Although the law does not take effect until 2027, preparation should begin now.

Employers should:

• Review existing agreements (employment, contractor, equity, and bonus arrangements)
• Identify provisions that could be interpreted as noncompetes under the expanded definition
• Update templates and policies—especially those involving repayment or forfeiture provisions
• Begin planning for compliance with the October 1, 2027, notice requirement

Final Thought

HB 1155 signals a clear shift in Washington's approach: employee mobility will take priority over contractual restrictions on competition.

For employers, the takeaway is straightforward: restricting employee mobility through noncompetes will take a backseat to more freewheeling competition for talent.

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Rob Maguire and Devin Smith are partners, Scott Prange is counsel, and Aliah McCord is an associate in the employment group in the Seattle office of DWT. For more insights, reach out to the authors or another member of our employment team or sign up for our alerts.