Washington State’s New Non-Compete Agreement Laws: Critical Changes and Employer Guidance


Legal Corner brings you the latest update on the legislative changes affecting non-compete agreements in Washington State. Governor Jay Inslee recently signed Substitute Senate Bill 5935, which updates and clarifies Washington’s restrictive covenant laws. These revisions, effective June 6, 2024, significantly impact the way non-competition agreements are defined and enforced.

1. Updated Definitions and Key Changes

1 (a) Expanded Definition of Non-competition Covenant

Previously, Washington’s law broadly defined a non-competition covenant as any agreement that restrained someone from engaging in a lawful profession, trade, or business. The new legislation clarifies this by explicitly including agreements that directly or indirectly prohibit the acceptance or transaction of business with a customer. This change addresses the common provision found in non-solicitation clauses prohibiting acceptance of business from a prior employer’s customer.

1 (b) Revised Non-solicitation Agreement Definition

The legislation narrows the definition of non-solicitation agreements to only include those prohibiting solicitation of current customers. Agreements prohibiting solicitation of former or prospective customers are now categorized as non-competition covenants, which are subject to stricter regulations.

1 (c) Goodwill and Ownership Interest Changes

Under the previous law, agreements related to the sale, acquisition, or disposal of a business’s goodwill or ownership interest were excluded from the definition of non-competition covenants. The new law limits this exemption to transactions involving an interest representing at least one percent of the business.

2.Presentation of Terms and Choice-of-Law Clarifications

2 (a) Timely Disclosure of Covenant Terms

To ensure enforceability, employers must now provide the terms of non-competition covenants in writing at the initial offer stage. This clarification mandates that the terms be disclosed no later than the initial oral or written acceptance of the offer, ensuring prospective employees have ample time to consider the terms before accepting.

2 (b) Choice-of-Law and Adjudication Requirements

The new law strengthens requirements for non-competition covenants to be adjudicated in Washington and prohibits any choice-of-law provisions applying laws of other jurisdictions. This ensures that Washington-based employees and independent contractors are uniformly protected under Washington law.

3. Limitations on Enforcement and Expanded Plaintiff Eligibility

3 (a) Restrictions on Pre-2020 Agreements

The legislation addresses enforcement actions for non-competition covenants agreed to before January 1, 2020. It prohibits actions to invalidate such covenants unless they are being enforced or explicitly leveraged, though the term “explicitly leveraged” remains undefined.

3 (b) Broader Scope for Plaintiffs

Previously, only parties to a non-competition covenant could bring a cause of action for damages. The new law expands this right to any aggrieved party, potentially including customers or prospective employers, though the exact scope of “aggrieved” remains undefined.

3 (c)Implications for Employers

Employers with Washington-based employees and independent contractors should review and update their non-competition agreements to ensure compliance with S.S.B. 5935. It’s essential to be cautious when enforcing or leveraging pre-2020 agreements and to disclose covenant terms promptly at the offer stage. Employers should also consider revising existing agreements to align with the new definitions and requirements to maintain enforceability.


The recent legislative updates to Washington’s restrictive covenant laws present significant implications for both employers and employees. Employers must take proactive steps to review and revise their non-competition agreements in light of S.S.B. 5935 to ensure compliance and avoid potential legal challenges. The expanded definitions and new requirements emphasize the need for transparency and fairness in the use of non-competition covenants.

For employees, these changes provide stronger protections and clearer guidelines, ensuring that non-competition agreements cannot unfairly restrict their professional opportunities. The inclusion of new provisions, such as the requirement for timely disclosure of covenant terms and the clarification of choice-of-law rules, further solidifies the state’s commitment to safeguarding worker rights.

Legal Corner stands ready to assist both employers and employees in navigating these complex legal landscapes, besides ensuring that your agreements are both legally compliant and strategically sound. As the legal environment continues to evolve, staying informed and prepared is crucial for minimizing risks and maximizing opportunities.