On March 23, 2026, Washington State Governor Bob Ferguson signed into law Engrossed Substitute House Bill 1155 (HB 1155), which effectively bans non-compete agreements for all employees and independent contractors in the state. Previously, in 2019 and 2024, Washington prohibited non-compete agreements for lower wage earners and included other requirements for such restrictions. Washington’s current expansion of its non-compete restrictions follows an increasing trend across the U.S., such as California, Colorado, the District of Columbia, Hawaii, Illinois, Minnesota, Oregon, and Virginia, of banning or otherwise limiting the use of post-employment non-competes and similar restrictions. Although not effective until June 30, 2027, employers should begin working with their counsel in preparation to comply with HB 1155.

Overview

Beginning June 30, 2027, employers will no longer be able to enter into non-compete agreements with employees and independent contractors in Washington State. Nor will employers be permitted to enforce non-compete agreements (even if previously valid), attempt to enforce them, threaten enforcement, or even represent to an employee or contractor in Washington that they are subject to a post-employment non-compete following that date.

Washington’s Ban on Non-Competes

Under HB 1155, a non-compete covenant is defined as “every written or oral covenant, agreement or contract that prohibits or restrains an employee or independent contractor from engaging in a lawful profession, trade, or business of any kind.” Notably, Washington’s new prohibition can also extend to provisions other than traditional non-compete covenants, such as retention bonuses or other advanced payments, if such provisions “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.” While HB 1155 is explicit that this restriction does not apply to repayment obligations for out-of-pocket educational expenses, the full scope of how courts and regulatory bodies may interpret this additional prohibition under HB 1155 remains to be seen.

As before, HB 1155 allows aggrieved employees and contractors to seek actual damages or statutory damages of $5,000, plus reasonable attorneys’ fees, expenses, and costs incurred in the proceeding.

Exceptions to Washington’s Ban on Non-Competes

Despite the impact of this new law on non-compete agreements, HB 1155 recognizes that certain contractual provisions will remain valid and enforceable, which include:

• Non-Solicitation Agreements: Employers may continue to enter into agreements that prevent the solicitation of current employees and customers. Importantly, HB 1155 also confirmed that the permissible scope of customer non-solicitation covenants includes agreements that prevent solicitation of both current and prospective customers. However, such non-solicit provisions must be limited in scope to customer-relationships that the employee “established or substantially developed” through the employee’s work for the employer and that are not longer than 18-months post-employment.
• Confidentiality/Intellectual Property Assignment Agreements: Employers may continue to enter into confidentiality and intellectual property assignment agreements that prohibit the use or disclosure of company confidential, proprietary, and trade secret information and inventions, subject to any existing limitations on such provisions.
• Sale of Business Non-Compete Restrictions: Employers may also continue to enter into non-compete agreements in connection with the purchase or sale of a business, subject to the existing one-percent threshold, or in connection with a franchise sale, which is compliant with applicable law.

Next Steps for Employers

By October 1, 2027, employers are required to “make reasonable efforts” to provide written notice to all current and former employees and independent contractors who have a non-compete agreement that is still within its effective period. While there is currently no official guidance on what constitutes “reasonable efforts,” based on how other states have approached similar requirements, it will likely involve taking the following steps:

• Reviewing relevant employment agreements, including offer letters and proprietary information agreements, and contractor agreements, to identify any provisions that may qualify as a non-compete under the law’s current definition.
• Identifying any updates or revisions to the company’s current forms of agreement that may need to be amended in light of HB 1155.
• Reviewing current confidentiality, proprietary information, non-disclosure, and other agreements to ensure that they are drafted to sufficiently protect the company’s confidential, proprietary, and trade secret information under applicable law.
• Preparing and sending written notices to relevant current and former employees and contractors by October 1, 2027, which makes clear that their non-compete agreements are void and unenforceable.

Wilson Sonsini is available to assist employers in navigating this new law. For more information, please contact Marina Tsatalis, Jason Storck, Susannah Howard, Matt Gorman, or any member of the firm's Employment Litigation and Trade Secret Litigation practices, or the firm’s Seattle office.