Washington employers built their restrictive covenant programs around an earnings threshold in force since January 1, 2020. That framework now has an expiration date. On March 23, 2026, Governor Bob Ferguson signed Engrossed Substitute House Bill 1155, codified as 2026 c 149, which rewrites chapter 49.62 RCW and voids virtually every non-compete covenant with a Washington-based worker as of June 30, 2027.
The date matters more than the headline. The statute reaches agreements that were already signed, whatever their date and whatever the worker earns. The contract sitting in your personnel file is on a clock, and so is the written notice obligation that follows it.
What the Washington non-compete ban does to agreements already signed
Beginning June 30, 2027, RCW 49.62.020(1) makes all noncompetition covenants void and unenforceable regardless of when the parties entered into them. There is no grandfather clause and no exception for the executive who took a large equity grant in exchange for a two-year restraint. The earnings threshold disappears from the chapter, and with it the compliance analysis employers have run since 2020.
The second subsection is the one most employers underestimate. Under RCW 49.62.020(2), it becomes a violation to enforce a covenant, to attempt or threaten enforcement, to represent that a worker is subject to one, or to enter into a new one. A cease and desist letter, a reminder slipped into an exit interview script, or a line in a reference call all fall inside that language. The prohibition attaches to conduct, not only to the paper in the file.
One clarification matters, because "retroactive" gets used loosely here. The act does not reopen closed matters. RCW 49.62.100 applies the amended sections to proceedings commenced on or after June 30, 2027, regardless of when the cause of action arose, and leaves suits filed before that date under the prior version of the chapter. The effect is still sweeping: an old agreement stops working on that date, though a case already before a judge does not evaporate. Employers leaning on broad confidentiality drafting as a backstop should read our analysis of how U.S. courts treat overbroad confidentiality clauses after the FTC non-compete rule before assuming that backstop holds.
Legal framework: chapter 49.62 RCW after ESHB 1155
Washington's noncompetition statute began with 2019 c 299, effective January 1, 2020, which barred covenants for workers below an inflation-adjusted earnings floor and presumed any restraint longer than eighteen months unreasonable. 2024 c 36 then tightened the definitions. The 2026 act changes the architecture rather than the settings. It amends RCW 49.62.005, 49.62.010, 49.62.020, 49.62.080, 49.62.090 and 49.62.100, and it repeals RCW 49.62.030, the separate independent contractor threshold, along with RCW 49.62.040, the annual inflation adjustment. Both repeals dismantle the machinery behind the old threshold analysis.
The definition in RCW 49.62.010(3) grows in two directions that matter for existing paperwork. It now captures covenants between a performer and a performance space or a booking intermediary, previously outside the definition and merely capped at three calendar days. It also captures any provision that requires an individual to return, repay or forfeit a right, benefit or compensation because they went to work in their trade. That item pulls forfeiture-for-competition language out of bonus plans and equity documents and treats it as a non-compete, which is where much executive compensation drafting sits. The rule capturing agreements that bar accepting business from a customer is not new; it carries over intact.
Remedies keep their amount. Under RCW 49.62.080, a violator owes the greater of actual damages or a statutory penalty of five thousand dollars, plus reasonable attorneys' fees, expenses and costs, and the Attorney General may pursue relief on a worker's behalf. Choice of law offers no escape: RCW 49.62.050 voids any provision requiring a Washington-based worker to litigate elsewhere or to apply another state's substantive law. The legislature's stated intent also disclaims any interference with tribal sovereignty over employment standards in Indian country. Both versions of each section, current and as amended, appear in the Washington State Legislature's chapter on noncompetition covenants.
The compliance window that closes on June 30, 2027
Until that date the old regime governs, and it is not a dead letter. A covenant is void unless the employer disclosed its terms in writing no later than the initial acceptance of the offer, or provided independent consideration where the worker signed after employment began. The floor set at one hundred thousand dollars in 2019 is adjusted each year for inflation by the Department of Labor and Industries, and the 2026 figure sits just under $127,000 for employees, with a far higher number for independent contractors. A worker let go in a layoff cannot be held to a restraint unless the employer pays base salary for the enforcement period, less what the worker earns elsewhere.
Timing determines which version of the statute governs a dispute. An action commenced in the spring of 2027 proceeds under the threshold rules; the same facts filed in July 2027 meet a flat prohibition. That gap creates an awkward incentive to litigate early, and a court is unlikely to reward a filing timed only to beat the effective date.
What survives the ban, and how narrowly
Non-solicitation agreements remain lawful, but the definition in RCW 49.62.010(4) is far tighter than the one practitioners are used to. A permissible clause covers soliciting employees away, and soliciting customers, patients or clients only where the departing worker established or substantially developed that direct relationship through their work, with the restraint expiring within eighteen months of termination. The statute then closes the obvious loophole: an agreement that directly or indirectly prohibits accepting business from a customer, patient or client is not a non-solicitation agreement at all. Passive receipt of business from a former client can no longer be drafted away in Washington.
Confidentiality agreements survive, as do covenants restricting the use or disclosure of trade secrets and inventions, and that is where the real protection now lives. A well-drafted confidentiality and invention assignment agreement protects the asset rather than the person, which is the distinction the legislature drew. The caution is obvious to anyone who has litigated one: a confidentiality clause so broad that it makes working in the same industry impossible is a non-compete wearing a different heading, and the heading will not save it.
Two commercial carve-outs remain. A covenant signed by someone buying or selling the goodwill of a business, or acquiring or disposing of an ownership interest, survives only if that interest represents one percent or more of the business, which makes the seller restraints in a business purchase agreement one of the few durable restrictive covenants left in the state. Franchisee covenants under RCW 19.100.020(1) also stand. A written agreement to repay out-of-pocket educational expenses escapes the ban if it expires within eighteen months of the start date, limits repayment to the pro rata remaining portion, and releases the worker where separation is for good cause under RCW 50.20.050.
Rebuilding your restrictive covenants before the deadline
The practical task before mid-2027 is a rewrite, not a repair. Every offer letter, executive agreement, contractor engagement and equity plan needs a pass for covenants the new definition captures, including forfeiture language nobody thinks of as a non-compete. Captain.Legal's non-compete and non-solicitation agreement template is built around that state-by-state divergence: you identify the governing state and the worker's category, and the questionnaire adjusts the covenant set instead of producing one national clause that fails in the strictest state.
For a Washington-based hire, the sensible output leans on confidentiality, invention assignment and a narrowly drawn non-solicitation clause tied to relationships the worker actually developed, with the duration held inside eighteen months. The generated agreement downloads in both Word and PDF, so counsel or an HR lead can adjust the recitals for a specific role before signature. Employers with workers in several states can generate parallel versions and keep the Washington file clean.
Where Washington employers get this wrong
The most expensive mistake is the choice of law clause. Plenty of agreements point to Delaware or Texas and treat the Washington statute as someone else's problem, but RCW 49.62.050 voids it for a Washington-based worker, along with the out-of-state forum selection. The second is geographic: what matters is where the worker is based, not where the company is incorporated.
Third, employers keep treating the covenant as the only exposure. The notice duty in RCW 49.62.020(3) requires reasonable efforts to write to current and former employees and independent contractors whose covenant is still within its effective time period, by October 1, 2027, telling them the covenant is void. That means reconstructing a list of departed workers, a records exercise few HR teams can finish in a week. Fourth, redrafting a non-compete as a customer non-acceptance clause turns a void provision into an enforcement violation with a five thousand dollar floor plus fees.
The last one is quiet and costly. Forfeiture and clawback language in bonus plans, deferred compensation and equity awards now falls inside the definition, so a company can be clean on its employment agreements and still be enforcing a prohibited covenant through its compensation documents. Audit the plan documents, not only the contracts.
Frequently asked questions
Are non-compete agreements signed before 2027 still enforceable in Washington?
They hold until June 30, 2027 if they meet the current requirements, including the earnings threshold, the disclosure timing and the eighteen month presumption. On that date RCW 49.62.020(1) makes them void regardless of signing date, with no grandfathering. The only wrinkle is procedural: a proceeding commenced before June 30, 2027 continues under the prior version of the chapter, so a case already filed is not wiped out by the effective date.
When must Washington employers tell workers their non-compete is void?
By October 1, 2027. RCW 49.62.020(3) requires reasonable efforts to provide written notice to all current and former employees and independent contractors whose covenant is still within its effective time period, stating that it is void and unenforceable. The statute prescribes neither wording nor delivery method, which leaves employers to document the efforts they made. Assemble the former worker list well before the summer of 2027, because addresses go stale quickly.
Does the Washington ban apply to independent contractors?
Yes. The ban covers employees and independent contractors alike, and the act repeals RCW 49.62.030, the separate contractor threshold, so the higher earnings figure that once let companies bind well-paid freelancers disappears entirely. Engagements built on a post-termination restraint need restructuring around confidentiality, work product ownership and trade secret protection instead. An independent contractor agreement drafted for 1099 relationships carries those protections without relying on a covenant that will be unenforceable.
Can employers still use non-solicitation clauses after June 30, 2027?
Yes, but only within the narrowed definition in RCW 49.62.010(4). The clause may cover soliciting employees away, and soliciting current or prospective customers, patients or clients where the worker established or substantially developed that direct relationship through their work, and it must expire within eighteen months of termination. Anything barring the acceptance of business from a customer sits outside the definition and counts as a prohibited covenant, whatever the heading says.
Do forfeiture and clawback clauses count as non-competes?
Under the amended RCW 49.62.010(3), yes. Any provision requiring an individual to return, repay or forfeit a right, benefit or compensation because they engaged in a lawful profession or trade falls inside the definition. That reaches deferred compensation, unvested equity and bonus repayment terms, which often sit in an executive employment agreement or a plan document rather than in the restrictive covenant section. Auditing the contracts alone leaves that exposure in place.
Is a template non-compete and non-solicitation agreement legally valid?
A properly drafted template is a binding contract once both parties sign it, and courts assess the clause itself rather than who typed it. Validity depends on the governing state: the same covenant that holds in Florida is void in California, and will be void in Washington from June 30, 2027. That is why the questionnaire asks for the worker's state before generating the covenant set, and why a Washington file needs rebuilding rather than reuse.
Can I download the agreement in Word and PDF?
Yes. Every document generates in both Word and PDF. The Word file is the practical one during negotiation, because it lets you adjust recitals, duration and the definition of protected relationships before circulating for signature. The PDF is the version to sign and archive. Both stay available in your account, which helps when you need to reconstruct which version a departing employee actually signed, and which matters when the notice deadline forces a file review.