From JDSupra, Meaghan Clayton, Raphael Coburn, and Chuck Knapp report on the top ten noncompete developments in 2019 including a statute in Washington that limits non-compete agreements with independent contractors. Meaghan, Raphael and Chuck write:
Washington Enacts Legislation Limiting Restrictive Covenants With Employees and Independent Contractors
On January 1, 2020, a Washington law will go into effect which places significant and highly detailed restrictions on the use of noncompetes. Under this law, noncompetes are unenforceable against an employee:
- Unless the employer discloses the terms of the noncompete in writing no later than the time the offer of employment is accepted.
- If the noncompete is entered into after employment begins, unless the employer provides independent consideration.
- Unless the employee’s earnings exceed $100,000 annually.
- If the employee is terminated through a layoff, unless enforcement of the noncompete includes compensation equivalent to the employee’s base salary for the period of enforcement.
The Act also limits the use noncompetes with independent contractors. Under the Act, noncompetes are unenforceable against independent contractors unless the independent contractor’s earnings exceed $250,000 per year.
The Washington Act applies to a broad range of restrictive covenants. In addition to the traditional noncompete agreement, the Act also applies to nonsolicitation agreements, confidentiality agreements, any covenant that prohibits the use or disclosure of trade secrets, sale-of-business noncompetes, and covenants entered into by a franchisee.