On March 23, 2026, Washington Governor Bob Ferguson signed Engrossed Substitute House Bill 1155 (HB 1155) into law, enacting a comprehensive ban on noncompete agreements within the state. Effective June 30, 2027, this legislation renders all existing and future noncompete covenants void and unenforceable, irrespective of when they were executed. This move positions Washington alongside California, Minnesota, North Dakota, and Oklahoma, which have implemented similar prohibitions.
HB 1155 defines a “noncompetition covenant” broadly, encompassing any agreement that restricts an employee or independent contractor from engaging in a lawful profession, trade, or business. This includes provisions that directly or indirectly prohibit accepting or transacting business with a customer, as well as clauses that require a worker to return, repay, or forfeit any right, benefit, or compensation due to engaging in lawful work. Notably, the law mandates that its protections be liberally construed, with exceptions narrowly interpreted.
While the ban is extensive, certain agreements remain permissible under the new law. Nonsolicitation agreements are allowed, provided they are narrowly drawn and limited to 18 months post-termination. These agreements can prohibit a departing worker from soliciting current employees to leave or from soliciting current or prospective customers, patients, or clients with whom the worker established a direct relationship through their employment. Additionally, confidentiality agreements, covenants prohibiting the use or disclosure of trade secrets or inventions, and noncompetition covenants related to the sale of a business are exempt from the ban.
Employers are required to take proactive steps to comply with HB 1155. By October 1, 2027, they must make reasonable efforts to provide written notice to all current and former employees and independent contractors with active noncompete covenants, informing them that such provisions are void and unenforceable. Failure to adhere to this requirement exposes employers to potential penalties, including actual damages incurred by the individual or a statutory penalty of $5,000, plus reasonable attorney’s fees, expenses, and costs.
Given the significant changes introduced by HB 1155, employers with Washington-based workers should begin preparations well in advance of the law’s effective date. Key steps include auditing existing agreements to identify and revise any noncompete, nonservicing, and forfeiture-for-competition provisions; assessing “stay or pay” arrangements to ensure compliance; reviewing nonsolicitation agreements to confirm they meet the new law’s parameters; and developing a process for timely notification to affected individuals.
As the June 30, 2027, implementation date approaches, it is crucial for employers to stay informed and ensure their practices align with the forthcoming legal landscape in Washington.