Washington State’s recent restrictions on non-compete contracts won’t go into effect until Jan. 1, 2020, but employees potentially affected by the changes should start learning about their new rights.
Signed by Gov. Jay Inslee in May, the “Non-Compete Act” offers new flexibility and protections to large swathes of employees to unlock their economic and entrepreneurial potential. It’s a major break from existing laws that have long allowed employers to prevent their workers from leaving to work for a competitor or launching a competing business.
Here are the law’s most important takeaway’s for employees:
Income thresholds: Non-compete agreements no longer apply to W-2 employees who earn less than $100,000 per year and independent contractors who making under $250,000 a year from the employer demanding the agreement.
Time limits: It also limits the duration of such agreements to 18 months after an employee leaves a company, unless the employer can prove a substantial business need for it to be longer.
Fair notice: Employers must spell out the terms of a non-compete in writing to any prospective workers before they take the job. Up to this point, companies have typically provided the agreements for an employee to sign on their first day of work, after the worker has accepted a job offer.
Layoff insurance: If an employer wants to enforce a non-compete agreement against a laid-off employee, the business will now have to pay the worker their base salary as long as the agreement is in force, minus all compensation the employee earns from subsequent employment during the same period. Known as “garden leave,” the measure provides workers a form of insurance amid layoffs.
Freedom to moonlight: The new law also affects so-called “moonlighting” policies, allowing any employee who makes less than twice the minimum wage to hold other jobs, unless the extra work would sap all of their energy or pose a danger to themselves or the public.
No poach no more: Franchise operators across Washington state–from Allstate Insurance to Jimmy John’s–can no longer restrict franchisees from hiring away or “poaching” employees from each other.
Employer penalties: Businesses that violate the new law are required to pay the employee a penalty of $5,000 or damages exceeding that amount, plus attorneys’ fees and related costs.
No loopholes: Employees are protected from out-of-state employers seeking to bypass the new non-compete rules by voiding any agreement that requires a Washington employee or contractor to settle the agreement outside Washington or not subject to the law.
If your non-compete agreement needs to be revoked, revised, or reviewed by a professional, call Emery Reddy. You won’t get better advice.