Washington businesses who rely on non-compete agreements to prevent employees and consultants from working for a competitor will need to rethink their strategy, thanks to a new state law. The law considerably limits the scope and enforceability of non-compete covenants. It also imposes significant penalties on businesses who seek to enforce overly broad non-compete agreements. But wait, there’s more! The law also restricts how businesses use moonlighting policies during employment. How should Washington businesses proceed? Very carefully. Read on to learn more.
First, some good news. The law excludes non-solicitation agreements, confidentiality agreements, inventions and trade secret covenants, and certain covenants by franchisees. Importantly, the law also excludes agreements with the seller or purchaser of the goodwill of a business and covenants with entities otherwise acquiring or disposing of an ownership interest.
Even though the law takes effect on January 1, 2020, it will affect agreements entered into before this effective date. Accordingly, businesses should take steps now to prepare for this change in the legal landscape.