Washington State Dramatically Shifts Its Restrictive Covenant Landscape With a Near Complete-Noncompete Ban for Workers

On 23 March 2026, Washington Governor Bob Ferguson signed Engrossed Substitute House Bill 1155 (ESHB 1155), which renders nearly all noncompete agreements void and unenforceable for Washington-based workers. This noncompete ban goes into effect on 30 June 2027.

While Washington law already prohibits noncompete agreements with employees earning below US$126,858.83 in 2026 and independent contractors earning less than US$317,147.090 in 2026, ESHB 1155 would ban noncompete agreements for all employees and independent contractors alike, with limited exceptions. The freshly inked ban aligns with the growing nationwide trend to proscribe or at least drastically limit noncompete agreements. For example, California, North Dakota, Oklahoma, and Minnesota have enacted near-complete bans, while Colorado, Illinois, Maine, Maryland, Oregon, Rhode Island, and Virginia have adopted significant restrictions on the use of noncompete provisions in the employment context. 

Below is a summary of the most significant aspects of the new-noncompete ban that employers need to know:

ESHB 1155 Enacts an Even-Broader Prohibition on Noncompete Covenants With Retroactive Effect

ESHB 1155 considerably expands the definition of “noncompetition covenant” to include: 

• A covenant “that prohibits or restrains an employee or independent contractor from engaging in a lawful profession, trade, or business of any kind.” 
• An agreement “between a performer and a performance space, or a third party scheduling the performer for a performance space, that prohibits or restrains the performer from engaging in a lawful performance.”
• An agreement “that directly or indirectly prohibits the acceptance or transaction of business with a customer.”
• The ban also now applies to any provision in an agreement that would require an employee, as a consequence of “engaging in a lawful profession, trade, or business,” to “return, repay, or forfeit any right, benefit, or compensation.” 

However, these expansive-noncompete definitions are not the end. The broad-noncompete ban applies regardless of when the agreement was entered into, meaning it would apply to agreements that were entered into before the enactment of the new law if the provisions contained in those agreements are still in effect as of 30 June 2027. 

The new law excludes certain types of restrictions from the definition of a noncompetition covenant, which employers may continue to utilize to protect their interests. Specifically, ESHB 1155 provides that nonsolicitation agreements are not prohibited outright, however, such covenants are to be narrowly construed and have a maximum postemployment duration of 18 months. Permissible nonsolicitation provisions include:

Employee Nonsolicitation

Employers may prohibit former employees from soliciting current employees. 

Customer Nonsolicitation

Employers may prohibit solicitation designed to “shift business” away from the employer—but only if the employee had substantially developed direct relationships with those prospective and current customers through their work.

Prospective Customers

Employers may restrict solicitation of prospective customers, but only if the employee had direct contact with that customer.

However, “nonsolicitation” agreements do not include provisions directly or indirectly prohibiting employees from accepting or transacting business from an employer’s customers. Additionally, employers may still enter into and enforce the following types of agreements: confidentiality agreements; covenants prohibiting use or disclosure of trade secrets; certain covenants entered in connection with the sale of a business involving at least a 1% ownership interest; franchise agreements that comply with RCW 19.100.020(1); and certain education-expense repayment agreements that satisfy specified statutory conditions.

Notice Obligations for Existing Noncompete Agreements

The new law requires employers to make reasonable efforts to provide written notice by 1 October 2027, to current and former workers whose covenants remain in effect to advise them that those provisions are void and unenforceable. 

Consequences of Violations

ESHB 1155 has teeth, too. Employers violate the new law not only by enforcing a noncompete covenant, but also by (1) attempting to enforce a noncompete covenant, (2) threatening enforcement of a noncompete covenant, (3) entering into or attempting to enter into such an agreement, or (4) representing that a worker remains subject to one. ESHB 1155 further provides that instead of allowing claims to persons “aggrieved by a noncompetition covenant,” the law permits any person “aggrieved by a violation of this chapter” to bring a cause of action against the employer. Violations may result in the greater of actual damages or a statutory penalty of US$5,000, plus lawyers’ fees and costs—exposure that can multiply quickly for employers with multiple-affected workers.

Key Takeaways for Employers

Given this significant and far-reaching new law, employers need to act quickly to prepare for ESHB 1155 to go into effect next year. Employers with Washington-based employees and contractors should take the following steps in advance of 30 June 2027:

1. Review Washington employment, contractor, equity, bonus, and separation agreements for provisions that may function as noncompetition covenants;
2. Evaluate customer-based restrictions such as nonsolicitation and noninterference clauses to determine whether they are narrowly tailored and permissible under the new law;
3. Review onboarding, offboarding, and template communications to avoid statements that could be characterized as threatening enforcement or representations of continuing enforceability of noncompetition covenants; and
4. Develop a plan to identify and provide notice to workers with noncompetition agreements once the law goes into effect.

The lawyers of our Labor, Employment, and Workplace Safety practice regularly counsel clients on a wide variety of issues related to restrictive covenants for employees and are well positioned to provide guidance and assistance to clients on this significant new law.