ESHB 1155
SignedHouse
Noncompetition agreements
Prohibiting noncompetition agreements and clarifying nonsolicitation agreements.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill bans most noncompetition agreements in Washington State to promote workforce mobility and economic growth. It declares such agreements void unless they meet narrow exceptions, and requires employers to notify workers that existing agreements are no longer enforceable. The law also tightens rules around nonsolicitation agreements and strengthens enforcement tools for workers.
- All noncompetition agreements are void and unenforceable starting July 1, 2025, regardless of when they were signed—except for very limited exceptions (e.g., purchase/sale of a business with ≥1% ownership, certain franchise agreements, and nonsolicitation agreements).
- Noncompetition agreements are only enforceable if the employee’s annualized earnings exceed $100,000 (adjusted yearly for inflation), and the employer disclosed the agreement in writing before the job offer or provided new compensation after hiring.
- If an employee is laid off, any noncompetition agreement must include continued base salary during the restriction period minus any new earnings—otherwise it is void.
- Courts or arbitrators presume noncompetition agreements longer than 18 months are unreasonable, and the employer must prove by clear and convincing evidence that a longer duration is necessary.
- Employers must provide written notice to current and former employees and independent contractors by October 1, 2025, stating that their noncompetition agreements are void and unenforceable under the new law.
- Violations are subject to civil penalties of $5,000 or actual damages (whichever is greater), plus attorney fees and costs; the Attorney General and injured individuals may enforce the law.
Who is affected
- Workers (employees and independent contractors) — Employees and independent contractors who have signed or are asked to sign noncompetition agreements; they are no longer bound by such agreements unless they meet very narrow exceptions, and may be entitled to compensation if terminated and later subject to enforcement attempts.
- Employers and business owners — Businesses that rely on noncompetition agreements to protect their interests; they can no longer enforce such agreements except in limited, specific circumstances, and must provide written notice to affected workers.
- Franchise businesses — Franchisees and franchisors; while standard noncompetition agreements are banned, limited exceptions apply to franchise sales that comply with state franchise law.
- Performers and entertainment industry stakeholders — Performers (e.g., musicians, actors) and performance venues or schedulers; noncompetition clauses that restrict performers from working elsewhere are now void, though nonsolicitation of customers or staff remains allowed.
- Laid-off workers — Workers who were laid off and subject to noncompetition agreements; such agreements are void unless the employer provides continued pay during the restriction period equal to base salary minus new earnings.
Pro/Con Analysis
Potential Benefits (5)
Workers (especially low- and middle-income) gain immediate freedom to change jobs, start businesses, or work for competitors without fear of legal penalties — directly enhancing labor mobility, wage bargaining power, and economic opportunity.
Business & EmploymentPeopleRef: Sec. 3(1)Mandated written notice by October 1, 2025, empowers workers with knowledge of their rights, reducing employer coercion and information asymmetry — especially beneficial for vulnerable workers (e.g., immigrants, gig workers) who may not know existing agreements are now void.
Rights & LibertiesPeopleRef: Sec. 3(3)Private right of action and statutory damages ($5,000 or actual damages, plus fees) create strong enforcement teeth, enabling workers to challenge illegal agreements without bearing full legal costs — a significant empowerment for low-income workers.
Rights & LibertiesPeopleRef: Sec. 4(2)The layoff compensation requirement (base salary minus new earnings) deters employers from using noncompetes as a tool to trap laid-off workers in unemployment — protecting income security during transitions and reducing long-term unemployment risk.
Business & EmploymentPeopleRef: Sec. 3(1)(c)By narrowing exceptions and requiring liberal construction of worker protections, the bill strengthens enforcement against abusive practices — indirectly supporting public safety by reducing exploitative labor conditions and fostering fair competition.
Public SafetyPeopleRef: Sec. 1(3)
Potential Concerns (5)
Employers must continue paying laid-off workers’ base salary (minus new earnings) during any restricted period if they attempt to enforce a noncompetition clause — effectively creating a financial disincentive to use such clauses and imposing direct labor costs on employers, especially small businesses without legal infrastructure to manage compliance.
Business & EmploymentPeopleRef: Sec. 3(1)(c)Employers must provide written notice to all current and former employees and independent contractors by October 1, 2025, stating noncompetition agreements are void — imposing administrative and potential legal compliance costs on businesses, especially small firms with limited HR capacity.
Business & EmploymentPeopleRef: Sec. 3(3)The 18-month duration presumption and clear-and-convincing-evidence burden shift make enforcement of even valid noncompetes significantly harder and more expensive for employers, increasing legal risk and uncertainty around workforce protection strategies.
Business & EmploymentPeopleRef: Sec. 3(1)(e) & Sec. 3(2)The $100,000 earnings threshold excludes most Washington workers (median household income ~$92K; median individual earnings ~$52K), meaning only top ~20% of earners qualify for potential enforceability — effectively rendering the exception meaningless for most workers and limiting employer flexibility for high-value roles below the threshold.
Business & EmploymentLean peopleRef: Sec. 3(1)(a)(ii) & (b)Civil penalties of $5,000 or actual damages (whichever is greater), plus attorney fees, create significant liability exposure for employers who inadvertently or in good faith rely on outdated agreements — potentially chilling legitimate use of other lawful restrictive covenants like nonsolicitation.
Business & EmploymentLean peopleRef: Sec. 4(2)
Who Is Most Affected
Low- and middle-income workers benefit most: they gain job mobility, bargaining power, and legal recourse against unenforceable agreements. The $100K threshold excludes many, but even those below it gain protection from enforcement attempts.
High-earning professionals (e.g., tech, finance, senior managers) may retain limited enforceability of noncompetes if they meet the $100K+ threshold and other conditions — but overall, reduced enforceability weakens employer leverage and may increase mobility and wage growth.
Small businesses (especially those using noncompetes for protection) face compliance costs and reduced ability to protect trade secrets — but benefit from reduced litigation risk and may gain from a more dynamic labor pool. Franchise operators benefit from the narrow exception for franchise sales.
Large employers with legal departments may absorb compliance costs more easily than small firms, giving them relative advantage — but overall, all employers face reduced ability to restrict worker movement, weakening a traditional tool for talent retention.
Independent contractors and gig workers gain explicit inclusion in the law’s protections — a major expansion from prior law — allowing them to challenge restrictive clauses that previously trapped them in platform-dependent work.