Washington State Non-Compete Reform: The 18-Month Cap and What Employers Must Pay to Enforce

RCW 49.62 restricts Washington noncompetition covenants and applies inflation-adjusted earnings thresholds. The original employee threshold was $100,000 and the independent-contractor threshold was $250,000; both are adjusted annually and must be checked for the enforcement year. Employers should also distinguish a true noncompetition covenant from confidentiality, trade-secret, customer nonsolicitation, and employee nonsolicitation terms because the statute treats categories differently.

A covenant lasting longer than 18 months is presumed unreasonable and unenforceable unless the employer proves by clear and convincing evidence that a longer period is necessary to protect its business or goodwill. Geography and restricted activities must also be reasonable. An employer should tailor the restriction to the actual competitive risk instead of using a nationwide prohibition covering work the employee never performed.

Disclosure timing is critical. The employer generally must disclose the covenant’s terms in writing no later than acceptance of the employment offer. If the covenant becomes enforceable only later because earnings rise, the employer must specifically disclose that possibility. A covenant introduced after employment begins ordinarily requires independent consideration, such as a genuine promotion, new compensation, or another negotiated benefit rather than continued employment alone.

A layoff does not automatically erase every covenant, but Washington generally bars enforcement against an employee terminated because of a layoff unless the employer pays compensation equivalent to the employee’s base salary during the enforcement period, reduced by compensation the employee earns through subsequent employment. Employers contemplating enforcement should budget for that statutory obligation and document whether the separation qualifies as a layoff.

The law creates employee-favorable remedies. If a court or arbitrator determines that a covenant violates the chapter, or reforms, rewrites, or only partially enforces it, the employer may owe the greater of actual damages or the statutory penalty, along with reasonable attorney fees, expenses, and costs. Choice-of-law and venue provisions cannot be used to strip Washington-based workers of statutory protection.

Alternatives often protect legitimate interests with less enforcement risk. Employers can use carefully drafted trade-secret and confidentiality agreements, access controls, return-of-property certifications, invention-assignment provisions, and appropriately limited nonsolicitation clauses. Paid garden leave can reduce hardship and strengthen fairness, but it must be coordinated with wage, benefits, and termination rules. Every template should be reviewed against current indexed thresholds and the worker’s actual duties.