Washington State Bans All Noncompete Agreements Effective June 30, 2027

At a Glance

• On March 23, 2026, Washington Gov. Bob Ferguson signed HB 1155, which voids all existing and future noncompete agreements for employees and independent contractors as of June 30, 2027. Washington joins California, Minnesota, North Dakota, and Oklahoma in enacting noncompete bans (among other states with narrower noncompete restrictions or requirements).
• HB 1155 broadly defines “noncompetition covenant” to include not only typical noncompete provisions, but also customer nonservicing agreements and forfeiture-for-competition provisions. 
• Narrowly drawn nonsolicitation agreements and sale-of-business noncompetes will remain permissible.
• Employers with Washington-based workers must provide written notice by October 1, 2027, to all current employees and independent contractors with active noncompete covenants — and former employees and independent contractors with still applicable agreements — informing them that such provisions are void and unenforceable. 
• Violations expose employers to actual damages incurred by the individual, or a statutory penalty of $5,000, plus reasonable attorney’s fees, expenses, and costs incurred in the proceeding.

Continuing the trend of states restricting or banning noncompete agreements, on March 23, 2026, Washington Gov. Bob Ferguson signed Engrossed Substitute House Bill 1155 (HB 1155) into law. The new law, which takes effect June 30, 2027, voids all noncompete agreements — including not only traditional noncompete provisions, but also customer nonservicing agreements and forfeiture-for-competition provisions — for employees and independent contractors in the state. This represents a significant departure from Washington’s existing framework, which permits noncompetes for workers earning above certain income thresholds and will remain in effect until June 30, 2027.

Current Law

Under Washington’s existing noncompete statute (RCW 49.62), enacted in 2019 and last revised in 2025, noncompete agreements are enforceable only if the worker earns more than a specified annual income threshold (in 2026, $126,858.83 for employees and $317,147.09 for independent contractors). The statute also imposes procedural requirements, including disclosure of the terms of the noncompete at or before the time of acceptance of an offer of employment or, if entered into after commencement of employment, independent consideration. The statute does not apply to nonsolicitation covenants, as defined by the law.

A Near-Total, Retroactive Ban

HB 1155 eliminates this income-based framework entirely. As of June 30, 2027, all noncompetition covenants with employees or independent contractors — regardless of when they were executed — are void and unenforceable. Employers will be prohibited from entering into, attempting to enforce, or even representing that a worker is subject to a covered noncompete. The ban applies to employees and independent contractors, as well as “performers” as defined by the statute.

Expanded Definition of “Noncompetition Covenant”

In addition to voiding traditional noncompete provisions, the law significantly broadens what constitutes a prohibited “noncompetition covenant” to include:

• Any agreement that directly or indirectly prohibits the acceptance or transaction of business with a customer (i.e., customer nonservicing provisions).
• Any agreement that requires a worker to return, repay, or forfeit any right, benefit, or compensation because of engaging in a lawful profession, trade, or business (i.e., forfeiture-for-competition provisions).
• Agreements between performers and performance spaces that restrict the performer from engaging in a lawful performance.

Notably, HB 1155 mandates the statute’s protections “be liberally construed and exceptions narrowly construed.” The scope of the forfeiture-for-competition ban is extremely broad as drafted and could implicate certain bonus repayment, clawback, or “stay or pay” arrangements that condition a benefit on an employee’s continued employment.

What Is Permitted?

HB 1155 will continue to permit employers to enter nonsolicitation agreements that prohibit a departing employee or independent contractor from (a) soliciting current employees of the employer to leave, or (b) soliciting current or prospective customers, patients, or clients to shift business away from the employer — but only if the employee established or substantially developed a direct relationship with those individuals through their work. Any such restriction must expire no later than 18 months following termination of the worker’s employment or engagement. Notably, this definition is slightly broader than current law, which does not include prospective customers within the safe harbor for nonsolicitation provisions. 

The law also preserves exceptions to the definition of noncompete agreements, including for: 

• Confidentiality agreements
• Covenants prohibiting the use or disclosure of trade secrets or inventions
• Noncompetition covenants related to the sale of a business
• Franchise agreements

The new law also expressly allows written agreements to repay out-of-pocket educational expenses if the agreement: (1) expires within 18 months of the employee’s start date; (2) limits repayment to the pro rata portion of the remaining time of the 18-month period; and (3) releases the employee from the obligation to repay if the employee’s separation from employment is based on “good cause” under RCW 50.20.05.

Written Notice Requirement

By October 1, 2027, employers must make “reasonable efforts” to provide written notice to all current employees and independent contractors whose noncompetition covenants remain within their effective period that such provisions are void and unenforceable. The notice requirement extends to former workers as well if their noncompete restrictions are still active.

Enforcement and Penalties

HB 1155 vests the Washington attorney general with authority to investigate and enforce violations. In addition, aggrieved employees — of any violation of the chapter, including the notice requirement — may bring private civil claims to recover the greater of their actual damages or $5,000, plus reasonable attorney’s fees and costs. The statute also provides that lawsuits filed before the June 30, 2027, effective date will not be subject to the new amendments — and, presumably, remain enforceable.

Key Takeaways for Employers

Although the new law does not take effect until June 30, 2027, employers with Washington-based workers should begin preparing now. In particular, employers should:

Audit Existing Form Agreements

Identify all form noncompete, nonservicing, and forfeiture-for-competition provisions in employment agreements, independent contractor agreements, equity plans, and incentive compensation arrangements that may be affected by the broad definitions in HB 1155.

Assess “Stay or Pay” Arrangements

Given the breadth of the forfeiture-for-competition ban, evaluate whether any bonus repayment, clawback, or similar arrangements could be characterized as noncompetition covenants under the new law.

Review Nonsolicitation Agreements

Ensure that customer and employee nonsolicitation provisions comply with the narrow parameters set by HB 1155 — particularly the prohibition on restrictions that directly or indirectly bar a worker from accepting business, which the law treats as an impermissible noncompete.

Prepare for the Notice Obligation

Develop a process for identifying and notifying all affected current and former employees and independent contractors by the October 1, 2027, deadline.

Strengthen Other Protections

With noncompetes off the table, employers should evaluate whether confidentiality, trade secret, and invention assignment agreements are sufficiently robust to protect key business interests.

In Conclusion

Washington’s action reflects the continued national momentum toward restricting noncompete and nonsolicitation agreements. For additional information regarding recent updates in this area, review our January alert Top 10 Noncompete Developments of 2025. Employers operating in multiple states should consider a jurisdiction-by-jurisdiction review of their restrictive covenant programs to ensure compliance with an increasingly varied patchwork of state laws, and continue to monitor legislative developments.