On March 23, 2026, Washington's Gov. Bob Ferguson signed House Bill 1155 (the “Bill”) into law. The Bill, effective June 30, 2027, bans all noncompete agreements except those in limited circumstances. By doing so, Washington becomes the newest state to ban the covenant in employment agreements.

What happens to existing noncompete agreements?

While the Bill does not go into effect until June 30, 2027, it applies retroactively with one narrow exception — litigation, but only litigation filed before the effective date. All litigation filed before June 30, 2027, will be governed by Washington's current noncompete law.

What do employers need to do to avoid penalties after June 30, 2027?

After June 30, 2027, employers have until October 1, 2027, to notify current and former employees with noncompete agreements that the agreement is void. Any employer who attempts to enforce an unenforceable noncompete agreement is subject to penalties of actual damages or $5,000 — whichever is greater — and an employee's reasonable attorneys' fees, costs, and expenses in defending against the lawsuit.

What — if any — restrictive covenants are still allowed?

The Bill does not apply to:

1. Nonsolicitation Agreements;
2. Confidentiality Agreements;
3. Nonndisclosure of Trade Secrets or Inventions;
4. Sale of Business so long as the person signing the covenant purchases, sells, acquires, or disposes of an ownership interest representing one percent or more of the business;
5. Sale of Franchises that comply with Washington's franchise laws; and
6. Education Expense Reimbursement Agreements if:
   1. It expires within 18 months of the employee's start date for employment;
   2. it limits repayment to the pro rata portion of the remaining time of the 18-month period; and
   3. It releases the employee from the obligation to repay if the employee's separation from employment is based on "good cause" under RCW 50.20.050.

What should employers do to prepare?

While the Bill does not take effect until June 30, 2027, employers should prepare now. Employers, to prepare, should:

1. Start having discussions with counsel regarding available options for entering into restrictive covenants with job candidates;
2. Start reviewing existing noncompete agreements and discussing with counsel whether any changes should be made (e.g., transitioning to a nonsolicitation, confidentiality, and nondisclosure agreement); and
3. Start having discussions with counsel on best practices for notifying current and former employees after June 30, 2027, that their noncompete agreements are void.