The law takes effect June 30, 2027. On that date, virtually all noncompetition covenants become void and unenforceable—no matter when signed.

Washington Governor Bob Ferguson signed ESHB 1155 into law on March 23, 2026, leaving Washington to join California, North Dakota, Oklahoma and Minnesota as states that broadly ban noncompetes. The new law is sweeping: It voids virtually all noncompete covenants, existing and future, effective June 30, 2027, and requires employers to provide notice that the noncompetes are void and unenforceable.

Washington already restricts noncompetes under its existing code, which voids noncompetes for those earning below an earnings threshold adjusted annually (currently $126,859 for employees and $317,147 for independent contractors). ESHB 1155 goes much further. It eliminates these income thresholds entirely and bans virtually all noncompete covenants outright.

When Does the Law Take Effect?

The law takes effect June 30, 2027. On that date, virtually all noncompetition covenants become void and unenforceable—no matter when signed. This retroactive reach distinguishes ESHB 1155 from most state noncompete laws, which apply only prospectively.

Legal proceedings begun before June 30, 2027, will be governed by the prior version of the statute. Proceedings begun on or after that date fall under the new law, regardless of when the cause of action arose.

Who Is Covered by the Law?

The law covers all employees, independent contractors and performers in Washington state.

Which Types of Agreements Are Prohibited?

ESHB 1155 broadly bans all “noncompetition covenants,” which include:

1. Traditional “noncompetes”: Any written or oral agreement that prohibits or restrains an employee or independent contractor from engaging in a lawful profession, trade or business of any kind.
2. Performer noncompetes: Agreements between performers and performance spaces that prohibit or restrain lawful performances.
3. Acceptance of business covenants: Agreements that directly or indirectly prohibit the acceptance or transaction of business with a customer.
4. Forfeiture/repayment covenants: Any provision requiring an individual to return, repay, or forfeit any right, benefit or compensation as a consequence of engaging in a lawful profession, trade or business. This captures forfeiture-for-competition clauses commonly found in equity compensation agreements.

What Types of Agreements Are Permitted?

1. Eighteen-month nonsolicitation agreements that prohibit soliciting any current or prospective customer, patient or client of the employer to shift business away from the employer if the employee established or substantially developed a direct relationship with the customer, patient, client or prospect through the employee's work for the employer.
2. Employee nonsolicitation agreements that prohibit soliciting employees away from the employer.
3. Confidentiality agreements.
4. Covenants prohibiting the use or disclosure of trade secrets or inventions.
5. Covenants tied to the purchase or sale of a business, but only if the signer holds 1 percent or more ownership.
6. Franchise covenants that comply with RCW 19.100.020(1).
7. Written agreements to repay out-of-pocket educational expenses, if certain conditions are met.

The new law also further narrows the definition of a permitted “nonsolicitation agreement.” A permissible nonsolicitation agreement must (1) expire no later than 18 months after termination and (2) be limited to customers, patients or clients with whom the employee established or substantially developed a direct relationship through work. An agreement that “directly or indirectly prohibits the acceptance or transaction of business” with a customer is a prohibited noncompetition covenant—not a permissible nonsolicitation agreement.

Can the Law Be Circumvented by Applying Another State’s Law Under Contract?

No. The new law leaves intact RCW 49.62.050, which renders void and unenforceable a provision that requires a Washington-based employee or independent contractor to adjudicate a noncompetition covenant outside of Washington, applies non-Washington law or otherwise deprives that employee or independent contractor of the protections of Washington law.

What Are the Consequences If an Employer Violates the Law?

ESHB 1155 bars employers from enforcing, attempting to enforce or threatening to enforce a noncompete after the effective date. An employer also violates the law by claiming an employee is bound by a noncompete or by entering or attempting to enter into one.

The penalties for violation are stiff. A violator must pay the aggrieved person the greater of actual damages or a $5,000 statutory penalty, plus reasonable attorneys’ fees, expenses and costs. The state attorney general may also pursue relief.

Steps Employers Must Take

ESHB 1155 is one of the most aggressive state-level actions against noncompetes in U.S. history. Its retroactive application to existing agreements and robust penalties set it apart from other states that ban noncompetes.

Employers with Washington-based employees or independent contractors should be proactive.

Audit Existing Noncompete Agreements

Identify all current and former employees and independent contractors bound by noncompetes to prepare for notice requirements.

Provide Requisite Notice to Employees and Independent Contractors by October 1, 2027

By October 1, 2027, employers must make reasonable efforts to notify in writing every current and former employee and independent contractor whose noncompete remains in effect that the covenant is void and unenforceable.

Assess Equity Compensation Agreements

The new law’s broad definition of “noncompetition covenant” captures forfeiture-for-competition clauses in stock option, restricted stock and other equity agreements. Review these provisions with counsel.

Rely on Permitted Alternatives

Nonsolicitation agreements (if narrowly drafted), confidentiality agreements and trade secret protections remain enforceable. Employers should evaluate whether these tools adequately protect their legitimate business interests.

Understand the Narrowed Nonsolicitation Definition

Employers that rely on customer nonsolicitation agreements must meet the law’s narrower standards. Each agreement needs an 18-month maximum duration and must cover only customers with whom the employee had a direct relationship. And no agreement may prohibit—directly or indirectly—accepting business from a customer.

Do Not Delay Action

The June 30, 2027, effective date provides a window to prepare—but the scope of compliance tasks is significant. Employers should engage counsel now. 

For More Information

If you have any questions about this Alert, please contact Shannon Hampton Sutherland, Lawrence H. Pockers, Ryan S. Crawford, any of the attorneys in our Trade Secrets and Non-Compete Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.