Washington State Passes Broad Prohibition on Non-compete Agreements
On March 23, 2026, Governor Ferguson signed HB 1155 into law, banning all non-competition agreements in the state—including those already in effect—regardless of worker income, requiring employers to notify affected individuals by October 1, 2027, and imposing a $5,000 statutory penalty plus attorneys' fees for violations.
On March 9, 2026, Washington's legislature passed HB 1155, which effectively bans non-compete agreements for all workers in the state. Governor Ferguson signed the bill into law on March 23, 2026, and it takes effect on June 30, 2027.
Unlike current Washington law, which permits non-competes for workers earning above certain income thresholds, HB 1155 eliminates this income-based approach and bans all non-compete agreements regardless of income. The ban applies retroactively to all non-compete covenants, even those entered into before the effective date. The law significantly broadens what constitutes a prohibited "noncompetition covenant" to include any provision that requires workers to return, repay, or forfeit rights, benefits, or compensation as a consequence of engaging in lawful work. The definition also explicitly covers agreements that directly or indirectly prohibit accepting or transacting business with a customer.
The law preserves narrowly drafted non-solicitation agreements, confidentiality agreements, and trade secret protections. Non-solicitation agreements may prohibit employees from soliciting other employees to leave or from soliciting customers, patients, or clients with whom the employee established or substantially developed a direct relationship, the latter for up to 18 months post-termination; however, they cannot prohibit accepting or transacting business with customers. The law also exempts non-competes entered in connection with purchasing or selling goodwill or ownership interests of 1% or more and permits written educational expense repayment agreements under specified conditions.
By October 1, 2027, employers must make reasonable efforts to notify current and former employees and independent contractors whose non-competes are still within their effective period that such agreements are void and unenforceable. Under the law, it is a violation for employers to enforce, attempt to enforce, threaten to enforce, represent that a worker is subject to, or enter into non-compete covenants after June 30, 2027. Violators must pay aggrieved persons the greater of actual damages or a $5,000 statutory penalty, plus attorneys' fees and costs. The law applies to all legal proceedings commenced on or after June 30, 2027, regardless of when the underlying claim arose. Courts must liberally construe the statute and narrowly construe its exceptions.
