New Washington state law bans noncompete agreements

Washington Gov. Bob Ferguson recently signed a law that makes noncompete agreements illegal statewide.

The measure, spearheaded by state Rep. Liz Berry (D-Seattle), outlaws noncompete agreements: in general, contracts that let employers forbid workers from creating or joining a competing business for a set amount of time.

Industries that utilize noncompete agreements, otherwise known as restrictive covenants, include technology, health care, finance and sales. The law, signed Monday, takes effect on June 30, 2027.

“Washington state is standing up for workers,” Berry said in a news release published Wednesday. “If you want to take a new job with better pay or leave to start your own company, your old job shouldn’t be able to block you from pursuing your dream.”

On the effective date, restrictive covenants will be unenforceable for all Washington-based workers and businesses, according to the new law. New noncompete agreements are illegal. Employers must notify current and former workers in writing about any voided noncompete agreements by Oct. 1, 2027.

The measure furthers a state law from 2019 that limited noncompete agreements to employees who earned more than about $126,859 and contractors who made more than around $317,147, according to the 2026 earnings thresholds posted by the Washington State Department of Labor and Industries.

The state’s latest approach echoes a decision made in 2024 under former President Joe Biden’s administration to prohibit noncompete agreements across the U.S. However, the Federal Trade Commission rolled back the ban this year.

“After the Non-Compete Rule was issued, several employers and trade groups filed lawsuits challenging it,” the agency wrote in a rule published in February. “Federal district courts in three jurisdictions issued opinions in lawsuits challenging the Non-Compete Rule.”

In Washington, the new injunction also clarifies nonsolicitation agreements, which bar former workers from courting clients and co-workers at their past workplaces.

Nonsolicitation agreements are not the same as noncompete agreements, and they are not prohibited. “However, the definition of (the) nonsolicitation agreement must be narrowly construed,” per the law.

Locally, attorneys are providing guidance to workplaces about the new measure.

“Washington now joins a small but growing number of states that have declared non-competition covenants void and unenforceable,” Alex Cates, senior counsel at law firm Holland and Knight, wrote in an advisory Tuesday. “This is a major change.”

States with full noncompete bans include California, North Dakota, Minnesota and Oklahoma, per the Economic Innovation Group, a bipartisan public policy organization.