On March 23, 2026, Governor Bob Ferguson signed House Bill 1155 into law, making Washington one of the strictest states in the country when it comes to noncompetition agreements. Effective June 30, 2027, virtually all noncompetition agreements with Washington-based workers will be void and unenforceable, regardless of an employee’s compensation level or when the agreement was originally signed.
If your business uses noncompete agreements, now is the time to act.
What the New Law Changes
Washington previously allowed noncompetition agreements for higher-earning workers, with annual income thresholds set by the Department of Labor and Industries (currently $126,858.83 for employees and $317,147.09 for independent contractors). H.B. 1155 eliminates those thresholds entirely. No matter how much a worker earns, noncompetes are now prohibited.
The law also voids existing agreements retroactively. Employers can no longer rely on noncompete provisions that workers signed in prior years, even if those agreements were valid when executed.
The definition of a “noncompetition covenant” has been broadened as well. Beyond traditional post-employment restrictions, the law now covers provisions that require a worker to repay, forfeit, or return any right, benefit, or compensation as a consequence of working in a competing profession, trade, or business. This means certain clawback, forfeiture, and repayment clauses may now be unenforceable if they effectively function as restraints on competition.
What Is Still Permitted
Not everything is off the table. The following types of agreements remain enforceable under H.B. 1155:
- Customer nonsolicitation agreements are still valid, but with tighter limits. They must focus on customers, patients, or clients with whom the worker had a direct relationship, and cannot extend beyond 18 months after employment ends.
- Employee nonsolicitation agreements and confidentiality agreements remain fully enforceable.
- Noncompetition covenants signed in connection with the purchase or sale of a business continue to be valid, provided the individual involved holds or is acquiring at least a 1% ownership interest.
There is also a new carveout for educational expense repayment agreements, provided the agreement expires within 18 months of the employee’s start date, limits repayment to the pro-rata portion of the remaining period, and releases the employee from repayment if the employer separates them without good cause.
The Notice Requirement
Employers have until October 1, 2027, to send written notice to current and former employees and independent contractors who signed noncompetition agreements that are still within their effective period. The notice must inform those individuals that their noncompete provisions are no longer valid or enforceable.
Significant Penalties for Noncompliance
Washington law already imposes a $5,000 statutory penalty per aggrieved employee or independent contractor, plus attorneys’ fees, costs, and potential injunctive relief. Because penalties apply on a per-worker basis, businesses that use standardized agreements face serious class action exposure, even if the noncompete was never actually enforced. H.B. 1155 is expected to accelerate class action filings in this area.
Steps Washington Employers Should Take Now
Whether you are a Washington-based employer or an out-of-state company with Washington-based workers, it is important to prepare before the law takes effect:
- Review your existing employment and contractor agreements to identify any noncompetition, clawback, forfeiture, or repayment provisions that may now be unenforceable. This review should extend to employee handbooks and internal policies as well.
- Update your template agreements and onboarding documents to remove prohibited language for Washington workers.
- Consider alternative protections such as narrowly tailored nonsolicitation provisions, confidentiality agreements, and trade secret protections.
- Plan ahead to meet the October 1, 2027 deadline for notifying affected current and former workers.
- Train your HR and management teams on the new requirements so that prohibited provisions are not inadvertently included in future agreements.
How NorthStar Law Group Can Help
H.B. 1155 represents a significant shift in Washington employment law, and the consequences of noncompliance are substantial. At NorthStar Law Group, we work with Washington businesses of all sizes to review employment agreements, update standard contracts, and build practical legal protections that hold up under current law.
If you have questions about how this new law affects your business, contact our office and schedule a consultation.
