Washington State is on the brink of eliminating nearly all noncompetition covenants. Engrossed Substitute House Bill 1155 (SHB 1155) has passed the Legislature and is currently on the Governor’s desk. If signed, the law will take effect on June 30, 2027, dramatically reshaping how employers protect their businesses and structure employee agreements.
Given the significance of this legislation, we’ve compiled responses to a few key questions employers are already asking. If you have additional questions, please contact the Stokes Lawrence Employment Group.
WHAT’s the Bottom Line for Employers?
- The Legislature has passed a bill banning nearly all noncompetes for Washington-based employees.
- Educational repayment agreements are now permitted only under narrow conditions.
- Nonsolicitation provisions remain enforceable, but must be narrowly drafted to avoid being classified as noncompetes.
- Employers must provide written notice to current and former employees subject to unenforceable noncompetes or prohibited repayment agreements.
Aren’t NonCompetes Already Banned?
Not entirely.
In 2019, Washington prohibited noncompetes for lower-wage workers and imposed income thresholds, notice requirements, and duration limits for others. While these reforms significantly curbed the use and enforcement of noncompetes, they also created a complex and sometimes uncertain compliance environment.
In 2024, the Legislature adopted clarifying amendments, which remain in effect until June 30, 2027. SHB 1155 would replace that framework with a far more sweeping prohibition.
What Does SHB 1155 Do to Noncompetes?
Beginning June 30, 2027, noncompetes for all Washington-based employees—regardless of income—will be void and unenforceable. The ban applies retroactively, invalidating existing noncompetes.
The legislation also expands the definition of what constitutes a noncompete. Any provision that effectively restrains an employee from working elsewhere—including restrictions on accepting business—falls within the ban.
For the first time, agreements that impose financial penalties or forfeiture for engaging in a lawful profession, trade, or business will be considered a noncompete. It is possible that certain signing bonuses, relocation bonuses, or other benefit forfeiture provisions will be scrutinized under these amendments.
However, educational repayment agreements (sometimes called TRAPs) are permitted, but only under limited statutory conditions, discussed below.
One narrow exception to noncompetes applies to individuals purchasing or selling an ownership interest in a business if that ownership interest is one percent or more of the business.
Employers must provide written notice by October 1, 2027, to current and former employees who are subject to an unexpired:
- Noncompete, or
- Prohibited training or repayment agreement.
The notice must inform employees that these provisions are void and unenforceable.
What Does the Law Do to Nonsolicitation Agreements?
Nonsolicitations are not banned outright, but the law draws clearer boundaries between enforceable nonsolicits and prohibited noncompetes.
Permissible Nonsolicitation Provisions
- Employee Nonsolicitation. Employers may prohibit former employees from soliciting current employees.
- Prospective and Current Customer, Client, or Patient Nonsolicitation. Employers may prohibit solicitation designed to “shift business” away from the employer—but only if the employee had substantially developed direct relationships with those prospective and current customers through their work.
New Limitations and Clarifications
- Maximum duration: 18 months.
- Employers may restrict solicitation of prospective customers, but only if the employee had direct contact with that customer.
- “No handling” restrictions prohibited. Any provision that directly or indirectly prevents an employee from accepting or transacting business will be treated as an unenforceable noncompete.
Compliant nonsolicitation provisions are not subject to the statutory notice and consideration requirements that applied to noncompetes, though employers should still review the best practices for rolling out restrictive covenant agreements with current and new employees with counsel.
Funding Employee Education: What Is Still Allowed?
Employers may always pay for employee education or training without imposing any repayment obligation.
If an employer wishes to require repayment of educational expenses upon an employee’s departure, the agreement must be narrowly tailored. Specifically:
- Repayment may cover only actual out-of-pocket educational expenses;
- The agreement may last no longer than 18 months;
- Any repayment obligation must be prorated based on the employee’s tenure following the training; and
- Repayment must be forgiven if the employee leaves for “good cause.”
Agreements outside these parameters risk being treated as unlawful noncompetes.
What Should Employers Do Now?
Even before the law takes effect, employers should begin planning.
Conduct a comprehensive review of all restrictive covenants for both employees and independent contractors, including noncompetes, nonsolicitations, and even certain educational or bonus repayment schemes. Consider redesigning agreements to emphasize confidentiality protections, trade secret safeguards, and narrow, compliant nonsolicitation provisions.
Review exit communications and separation agreements to ensure they do not imply that unenforceable restrictions remain valid.
Identify current and former employees who may be subject to unenforceable noncompetes. Ensure you can provide statutory notice by October 1, 2027.
In a Current NonCompete Dispute?
If you are currently involved in a dispute over a noncompete, consult your legal counsel.
