Client Alert: Washington Bans Nearly All Non-Competes

On March 23, 2026, Washington Governor Bob Ferguson signed into law Engrossed Substitute House Bill 1155 (ESHB 1155), which bans nearly all noncompete agreements between companies and their employees and independent contractors. The law applies retroactively and includes previously signed agreements to the extent they remain effective.

Previously, the Washington legislature had restricted noncompetes for lower-wage workers under a 2019 law. This new law goes above and beyond.

Effective June 30, 2027, the law expands the definition of “noncompetition covenant” and clarifies certain limited exceptions.

Exceptions to the Noncompete Ban

• Nonsolicitation agreements that expire within 18 months of an employee’s termination and that prohibit an employee, after termination, from directly soliciting customers, prospective customers, patients, and clients – if the employee has a direct relationship with the customer, patient, client, or prospect through their prior work with the employer. (Note, however, that any agreement directly or indirectly prohibiting a person from accepting business with a customer, patient, or client is still prohibited.)
• Confidentiality and nondisclosure agreements that protect proprietary information and trade secrets.
• Sale of business agreements entered into in connection with the purchase or sale of a business, so long as the person signing the agreement is buying, selling, or otherwise acquiring or disposing of an ownership interest representing 1 percent or more.
• Franchise agreements entered into by a franchise in connection with the sale of a franchise, so long as the agreement complies with applicable franchise law.
• Educational expense repayment agreements requiring employees to repay out-of-pocket education expenses, but only if such agreement expires within 18 months of the employee’s start date, limits repayment pro rata over that period, and releases the employee from the repayment obligation if the employee separates for “good cause” (under unemployment insurance standards).

The Affirmative Duty to Notify

Additionally, by October 1 2027, employers have an affirmative duty to make “reasonable efforts” to provide written notice to all current and former employees or independent contractors whose noncomplete agreements have been made void and unenforceable by this new law.

Consequences of Violating the Law

Employers found in violation of the law must pay affected workers the greater of $5,000 or the workers’ actual damages. Employers will also be on the hook for the workers’ reasonable attorney fees, expenses, and costs. In addition to facing potential lawsuits, the Washington Attorney General may bring enforcement actions on behalf of affected workers.

Compliance Tips

Although the law takes effect on June 30, 2027, given that it extends certain employer obligations to former employees and independent contractors, employers should begin preparing by doing the following:

• Review old personnel files and other agreements to identify any provisions that may qualify as a void and unenforceable noncompete under the law’s expanded definition.
• Review records to ensure contact information is available for past employees who would otherwise remain subject to a newly prohibited noncompete.
• Consider whether existing agreements, including confidentiality and trade secret agreements, are sufficiently tailored under the law. Consider also whether confidential information and trade secrets are being adequately protected.
• Consider adopting practices to reinforce client retention and business goodwill when key employees are separated.

• Plan to send written notices to both current and former workers (including independent contractors) by October 1, 2027.

If you have any questions, please contact the Cairncross & Hempelmann attorney with whom you commonly work. Otherwise, please contact our Employment practice group lead, Rochelle Y. Doyea, at rdoyea@cairncross.com.