Citizen Media Watch

december 20th, 2020

Washington State Law Non Compete Agreements

Posted by lotta

In recent years, Washington`s legislature has become increasingly interested in ousting the General Competition Prohibitions Act. Previous proposals would have limited the use of non-competition agreements with workers in certain sectors and occupations (e.g. B doctors) as well as part-time or part-time workers. Previous proposals would also have made longer non-competition durations for agreements elusive. The law requires employers to communicate to the worker the terms of the non-competition agreement in writing and no later than the date the worker accepts the job offer. If this is not the case, the agreement will be invalidated. Therefore, employers should ensure that the specific terms of the non-competition clause are included in the letter of offer to the potential worker, even if the language of non-competition is contained in other employment agreements, such as a confidentiality and ownership agreement. Given its retroactive application, the new Washington law could face a constitutional challenge under the treaty clause in Article 1 of the U.S. Constitution. As fans of the Broadway musical Hamilton will remember, the guarantee of financial stability for the new American Republic was a major concern of the founders. However, the country`s financial stability has been undermined by attempts by governments to pass laws that free people from their obligation to pay their debts.

That is why, when the Framers adopted the Constitution, they contained a restriction on the power of states to amend contractual agreements. In particular, in the terms of the contract clause, ”[n] o the state… Spend… Law that affects the obligation of the contract. A bill imposing new restrictions on non-compete bans passed both houses of the Washington state legislature this week. Gov. Jay Inslee is expected to sign the bill in the coming weeks. This is great news for Washington companies and their employees (although less so for highly compensated employees in technology companies such as Amazon, Facebook and Microsoft, as explained in more detail later in this article). While the new law does not purport to completely prohibit the use of non-competition prohibitions, it imposes significant restrictions on their use by Washington employers. The sample of the main restrictions is examined below. Like many other states, Washington is trying to limit the application of non-compete clauses to low-wage workers.

In Washington, non-competition clauses do not apply to employees earning less than $100,000 in annual wages (not just base salaries) or to independent contractors earning less than $250,000 a year. This arbitrary threshold (which will increase each year with an inflation rate) will create applicability challenges for sales and other workers, whose compensation is often linked to incentive pay and for whom overall annual earnings hover around the threshold. We can help you design a non-compete or non-invitation agreement that complies with existing legislation to protect your business from legal penalties. Contact us today for help in your competitions. The Washington act has long had non-competition obligations and provides that agreements can only be implemented to the extent that they are appropriate, scope, duration, purpose and effect – this will likely be a threshold that employers will have to meet to enforce an agreement, even if they meet the status requirements.



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