The Basics
In 2020, Washington enacted one of the nation's strictest non-compete laws. The law doesn't ban non-compete agreements entirely, but it significantly limits when they can be enforced—and creates real penalties for employers who get it wrong.
For technology companies and other businesses that rely on protecting proprietary information, understanding these rules is essential. Many non-compete agreements that were enforceable before 2020 no longer are.
Key Thresholds
The law's most significant feature is its income thresholds. Non-compete agreements are only enforceable against workers who earn above certain amounts, adjusted annually for inflation.
$126,859
Minimum annual earnings for employees (2026 threshold)
$317,147
Minimum annual earnings for independent contractors (2026 threshold)
These thresholds are adjusted each year based on the Consumer Price Index for urban wage earners and clerical workers (CPI-W). The Department of Labor & Industries announces new thresholds each September 30, effective the following January 1. A non-compete signed with an employee earning below the threshold is void from the start—regardless of what the agreement says.
For reference, here's how the thresholds have increased since the law took effect:
| Year | Employee Threshold | Contractor Threshold |
|---|---|---|
| 2020 (original) | $100,000 | $250,000 |
| 2025 | $123,394 | $308,485 |
| 2026 | $126,859 | $317,147 |
The threshold includes the employee's annualized base salary or hourly wage at the time of termination. Bonuses, commissions, and equity are generally not included in the calculation. If an employee's compensation fluctuates, the analysis can become complicated. The relevant figure is typically Box 1 of the employee's W-2 or the contractor's 1099.
Additional Requirements
Even if an employee earns above the threshold, the non-compete must meet several additional requirements to be enforceable:
Disclosure at Hiring
For new employees, the non-compete must be disclosed in writing no later than the time of the job offer. You can't wait until the first day of work or bury it in an employee handbook.
Independent Consideration for Existing Employees
If you're asking a current employee to sign a non-compete (who didn't sign one at hiring), you must provide independent consideration—typically additional compensation beyond their regular pay. Continued employment alone isn't enough.
Garden Leave Requirement
If you terminate an employee (other than for cause) and want to enforce the non-compete, you must pay them during the restricted period. This "garden leave" must equal their base salary at the time of termination.
The garden leave requirement doesn't apply if the employee voluntarily resigns or is terminated for cause.
Maximum Duration: 18 Months
Non-competes lasting longer than 18 months are presumptively unreasonable. An employer can overcome this presumption by proving the longer duration is necessary to protect a legitimate business interest—but it's an uphill battle.
What's Still Enforceable?
The law limits non-competes, but it doesn't eliminate all post-employment restrictions. Several other types of agreements remain enforceable:
Non-Solicitation Agreements
Agreements that prevent departing employees from soliciting your customers or employees are explicitly allowed under the statute, regardless of the employee's income level. These must be reasonable in scope, but they're not subject to the income thresholds.
Confidentiality Agreements
The law doesn't affect confidentiality or non-disclosure agreements. You can still require employees to protect trade secrets, proprietary information, and confidential business information—and these agreements don't have income thresholds. However, Washington employers should be aware that the Silenced No More Act places significant restrictions on employee confidentiality agreements. Consult with an attorney to ensure your agreements comply with both statutes.
Invention Assignment Agreements
Agreements requiring employees to assign intellectual property created during their employment remain fully enforceable. These are standard in technology companies.
Sale of Business Non-Competes
Non-competes signed in connection with the sale of a business (where the seller receives significant consideration) are exempt from the statute's restrictions. These are governed by common law reasonableness standards.
| Agreement Type | Subject to Income Threshold? | Garden Leave Required? |
|---|---|---|
| Non-Compete | Yes | Yes (if terminated without cause) |
| Non-Solicitation (customers) | No | No |
| Non-Solicitation (employees) | No | No |
| Confidentiality/NDA | No | No |
| Invention Assignment | No | No |
| Sale of Business | No (exempt) | No |
Penalties for Non-Compliance
The statute has teeth. If an employer attempts to enforce a non-compete that violates the law, the employee can recover:
- Actual damages
- Statutory damages of $5,000 or actual damages, whichever is greater
- Reasonable attorneys' fees and costs
The fee-shifting provision is significant. Even if the employer "wins" on the underlying dispute, it may still be liable for the employee's legal fees if the non-compete itself was unenforceable.
Choice of Law Provisions
Some employers try to avoid Washington's law by including a choice-of-law provision selecting a more employer-friendly state. Washington's statute addresses this directly: if the employee is primarily based in Washington, Washington law applies regardless of what the agreement says.
Practical Implications for Tech Companies
For technology companies in Washington, the non-compete law requires a shift in how you protect your business:
Focus on Confidentiality
Since confidentiality agreements aren't subject to the income thresholds, they become your primary tool for protecting proprietary information. Make sure your NDAs are well-drafted and specific about what information is confidential.
Protect Trade Secrets Actively
Washington has adopted the Uniform Trade Secrets Act. To maintain trade secret protection, you need to take reasonable steps to keep the information secret—access controls, confidentiality training, and clear marking of sensitive materials.
Use Non-Solicitation Strategically
Non-solicitation agreements for customers and employees aren't subject to the income thresholds. For many businesses, preventing a departing employee from taking customers or recruiting colleagues is more valuable than a broad non-compete anyway.
Consider Your Options at Termination
If you're terminating a high-earning employee and want to enforce a non-compete, you'll need to pay garden leave. Factor this cost into your decision. Sometimes it's worth it; often it's not.
Audit Existing Agreements
If your standard employment agreements were drafted before 2020, they likely need updating. Non-competes that don't comply with the statute are void and could expose you to penalties if you try to enforce them.
The Bottom Line
Washington's non-compete law fundamentally changes the landscape for employers. Non-competes are still available for high-earning employees, but only with proper disclosure, consideration, and (often) garden leave.
For most employees, the practical alternative is a combination of robust confidentiality agreements, well-drafted non-solicitation provisions, and strong trade secret practices. These tools aren't subject to the income thresholds and can effectively protect your business when properly implemented.
The FTC has proposed rules that would further restrict non-compete agreements nationwide. As of this writing, those rules are not yet in effect and face legal challenges. Washington's law remains the governing framework for Washington-based employees, but employers should monitor federal developments.
Questions about your agreements?
Every situation is different. Schedule a consultation to review your employment agreements or discuss a specific situation.
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