On March 23, 2026, Washington Governor Bob Ferguson signed into law the engrossed Substitute House Bill 1155 (ESHB 1155), a sweeping measure that bans nearly all non‑competition covenants for employees and independent contractors. The law takes effect on June 30, 2027.

Comprehensive Ban on Noncompetition Covenants

As enacted, the law renders all non-competition covenants void and unenforceable as of June 30, 2027, regardless of when the agreements were signed. Furthermore, the bill prohibits employers from enforcing, attempting to enforce, threatening to enforce, or entering into any non-competition covenant with any employee or independent contractor.

Expanded Definition of “Noncompetition Covenant”

The statute significantly expands the definition of prohibited non-competition covenants to include:

• Restrictions on performers
• Clauses that prohibit an employee or contractor from accepting or transacting business with customers
• Provisions requiring repayment or forfeiture of compensation triggered by competitive conduct.

Limited Carve-Outs

The bill contains some narrow exceptions:

• Customer non-solicitation agreements that are limited to active solicitation and capped at a term of 18 months post-employment
• Confidentiality agreements prohibiting the use or disclosure only of trade secrets.
• Covenants related to the purchase or sale of goodwill of a business, or in acquiring or disposing of an ownership interest, but only when the individual buying or selling holds more than one percent of the business
• Covenants entered into by a franchisee when the franchise sale complies with Washington law (RCW 19.100.020(1))
• Agreements to repay out-of-pocket educational expenses, if it meets strict statutory requirements

Employer Notice Requirements

Employers must make reasonable efforts to provide written notice to all current and former employees and independent contractors within the term of a noncompetition covenant that the covenants are void and unenforceable. The statute requires the notices be delivered no later than October 1, 2027.

Enforcement and Penalties

Both the attorney general and aggrieved individuals may bring actions for violations of this bill. Employers face liability for the greater of actual damages or a $5,000 statutory penalty, plus reasonable attorneys’ fees. These remedies apply to enforcement attempts threats of enforcement, and misrepresentations about enforceability.

Retroactivity and Pending Cases

The new statute will apply to all legal proceedings initiated on or after June 30, 2027, regardless of when the agreement was signed.  But, legal actions pending before June 30, 2027 will be governed by the prior statutory requirements.

What Employers Should Do

Now that the Governor has signed the bill into law, Washington’s restrictive covenant landscape has completely changed.  Now, Employers need to plan to comply with this statute by reviewing employment agreements, considering alternatives to noncompetes (garden leave provisions, customer non-solicitation provisions, non-disclosure provisions), and ensuring they are adequately prepared to provide written notice to their employees and former employees that their noncompetes are no longer enforceable.

If you have questions about non-compete agreements, please contact your UBG attorney or Chris Pickett at cpickett@ubglaw.com.

The information provided in this alert speaks only to the information and guidance we have available as of the date of publication and is subject to change. This legal update was created by UB Greensfelder LLP and is not intended as a substitute for professional legal advice. Receipt, by itself, does not create an attorney-client relationship. For any questions, or for further information, please contact your UB Greensfelder attorney.