On March 23, 2026, Washington Governor Bob Ferguson signed into law SHB 1155, which amends state law to ban noncompetition covenants. The new law, which goes into effect June 30, 2027, bans both future and existing noncompetition covenants.
SHB 1155 also expands the definition of what constitutes a prohibited noncompetition covenant to include agreements that restrict “performers” and agreements that “threaten[], demand[], require[], or otherwise effectuate[] that an individual return, repay, or forfeit any right, benefit, or compensation, as a consequence of the individual engaging in a lawful profession, trade, or business of any kind.”
The law further requires employers to make “reasonable efforts” to notify all current and former employees and independent contractors who are subject to a noncompete covenant that the covenant is void and unenforceable by Oct. 1, 2027.
SHB 1155 makes it a violation to seek enforcement of a noncompetition covenant and creates a private cause of action. A party who prevails in showing a violation occurred is entitled to their actual damages or $5,000 (whichever is greater), plus attorneys’ fees, expenses and costs.
The new law preserves language specifying which agreements are excluded from the definition of a noncompetition covenant, including non-solicitation agreements, confidentiality agreements, and covenants restricting use or disclosure of trade secrets or inventions. The law also adds language that excludes restrictions related to tuition-reimbursement agreements from the definition of a noncompete covenant so long as certain terms are met.
The law also maintains an exception for noncompete agreements that are in connection with the purchase or sale of a business. But such agreement is only enforceable against a person owning or disposing of “an ownership interest representing one percent or more of the business.”
Although SHB 1155 maintains that non-solicitation agreements are not noncompete covenants, the new law notably tightens the scope of what constitutes a lawful non-solicitation agreement. Among other things, the duration must be no later than 18 months following termination. Furthermore, the new law expressly calls for the definition of non-solicitation agreements to be “narrowly construed.”
With SHB 1155 set to take effect on June 30, 2027, Washington joins a small handful of states that outright ban noncompetition agreements. Employers in Washington should carefully review existing employee covenants to ensure they are lawful going forward and provide timely notice to current and former employees presently under noncompetition covenants.
