Washington State has long taken a skeptical view of noncompetition agreements—and that skepticism is now on the brink of becoming a complete ban. Both chambers of the Legislature have approved Engrossed Substitute House Bill (ESHB) 1155, and the bill now awaits Governor Bob Ferguson’s signature, which is widely expected.
If signed, the law will dramatically reshape Washington’s restrictive covenant landscape. It would also position Washington State within a growing national trend to prohibit or sharply limit noncompetition agreements. California has long been the most prominent example, banning employment noncompetes for decades. North Dakota, Oklahoma, and Minnesota have also enacted complete bans. Several other states have adopted significant restrictions on the use of noncompetes, including Colorado, Illinois, Maine, Maryland, Oregon, Rhode Island, and Virginia.
Here’s what employers need to know.
Legislative Intent to Ban Noncompetition Agreements Entirely
ESHB 1155 begins by revisiting the Legislature’s earlier efforts to regulate restrictive covenants. The bill acknowledges that while Washington took “a critical step forward” in 2019 by banning noncompetition covenants for lower‑wage earners, “this did not go far enough.” The new findings section declares the Legislature’s intent “to ban noncompetition covenants for all Washington‑based workers and businesses.” This explicit statement makes clear that the policy goal is full elimination of noncompete agreements in the state.
Nonsolicitation Agreements Narrowed but Still Permitted
Importantly, the bill does not prohibit nonsolicitation agreements. Instead, it clarifies that such agreements remain lawful but must be “narrowly construed.” The legislation also revises the statutory definition to specify that a permissible nonsolicitation agreement may prohibit an employee, after termination, from soliciting co‑workers or from soliciting customers, clients, patients, or prospects to shift business away from the employer—but only when the employee established or substantially developed the relationship during their employment and only for up to 18 months following separation. The bill further states that any agreement restricting a former employee from accepting or transacting business with customers is not considered a valid nonsolicitation agreement.
Expansion of What Counts as a Noncompetition Agreement
The bill expands what qualifies as a noncompetition covenant. Newly included within the definition are agreements between performers and performance spaces (or scheduling intermediaries) that restrict lawful performances, as well as any contractual provision requiring a performer or employee to return, repay, or forfeit compensation or benefits as a consequence of engaging in a lawful business or profession. These expanded definitions prevent employers from using indirect or creative mechanisms to accomplish what traditional noncompete agreements once did.
Carveouts That Remain in Effect
Several longstanding carveouts continue under the revised statute. Noncompetition agreements do not include nonsolicitation agreements, confidentiality agreements, covenants prohibiting the use or disclosure of trade secrets or inventions, or covenants tied to the sale or purchase of a business in which the individual has at least a one‑percent ownership interest. The bill also adds a new carveout for written agreements requiring employees to repay out‑of‑pocket educational expenses, so long as the agreement expires within the first 18 months of employment, repayment is pro‑rated, and the repayment obligation is waived if separation occurs for “good cause” as defined in RCW 50.20.050.
All Noncompetition Agreements Will Become Void and Unenforceable
Once the bill takes effect—expected June 30, 2027, pursuant to legislative summaries—all noncompetition covenants will become void and unenforceable, regardless of when they were signed. Employers will also violate the statute if they attempt to enforce, threaten to enforce, or represent that an employee is subject to a noncompetition covenant. Even attempting to enter into such a covenant will constitute a violation.
Employer Notice Obligations
By October 1, 2027, employers must make reasonable efforts to provide written notice to all current and former employees and independent contractors whose noncompetition covenants would otherwise still be in effect, informing them that their covenants are void and unenforceable under the new law. This requirement will necessitate a review of personnel records and contract archives to identify anyone subject to legacy noncompetition clauses.
Clarification of Private Right of Action and Penalties
ESHB 1155 also clarifies who may bring a claim under the statute. Instead of allowing claims to persons “aggrieved by a noncompetition covenant,” the bill permits any person “aggrieved by a violation of this chapter” to bring a cause of action. A violation requires payment of the greater of actual damages or a statutory penalty of $5,000, plus attorneys’ fees and costs—exposure that can multiply quickly for employers with multiple affected workers.
Key Takeaways for Employers
All noncompetition agreements in Washington State will soon become void once Governor Ferguson signs ESHB 1155. Given the strong legislative push, employers should anticipate a near‑term effective ban. While nonsolicitation agreements remain permissible, the narrowed definition means employers must review and likely revise existing templates to avoid inadvertently creating an unlawful noncompetition provision. Employers should also prepare for potential liability, as violations may result in significant statutory penalties and attorneys’ fees.
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