Make a Washington Non-Compete Agreement

Applicable State Laws - RCW §§ 49.62.005-900 

While non-compete agreements are legal in Washington state, there are several standards and exemptions for their use. The criteria for using a non-compete agreement are as follows:

• A Washington business may only use the document to protect trade secrets, customer information, customer contacts, and goodwill. The document may only be written as broadly as necessary to protect such information.
• The takeaways for the employer may not be at a detriment to public policy.
• It must be reasonable in time period and space.
• As of January 1, 2020, notice must be provided before acceptance of the offer or before the agreement becomes effective (whichever is appropriate).
• Independent consideration is necessary for mid-employment situations.
• There is a presumption that non-competes with a time period greater than 18 months are unenforceable.
• Choice of law provisions must not be used to avoid Washington law.
• Reasonable attorneys' fees will be awarded to the former employee if it is found that the non-compete violates state law.

The exemptions for use include broadcasters in certain circumstances. And, as of January 1, 2020:

• Employees earning less than or equal to $100,000 or independent contractors earning less than or equal to $250,000 (adjusted for the compensation equivalent of inflation);
• Employees who are not working as a result of a layoff (unless they receive the employee's base salary, less any new earnings);
• Low-wage workers (those earning two times less than state minimum wage) cannot be prohibited from moonlighting.

Protect your Washington business by also using a Washington non-disclosure agreement form. Download a Washington non-disclosure agreement form now!

How to Write a Washington Non-Compete Agreement

To write a Washington non-compete agreement, include the following clauses:

• Purpose. This clause explains the purpose of the non-compete agreement: to protect the confidential information of the business. It also identifies the parties and provides the effective date of the contract.
• Non-compete. This clause lists the restrictions the employee is obligated to follow if they sign the agreement. It includes the period of time (which is not to exceed 18 months), geographic scope, general and specific business activities, working for general and specific competitors, and non-solicitation of customers, clients, and employees.
• Time period. This clause explains when the time period begins: either when the employment relationship begins or terminates.
• Purchase option. This clause explains whether the employer will allow the employee to buy out the contract. If so, the amount that must be paid is listed in this clause.
• Jurisdiction. This clause states that Washington laws will govern the non-compete agreement.
• Confidential information. This clause defines "confidential information" as any and all technical and non-technical information provided by the employer that includes, and is not limited to, any data or other proprietary information related to products, inventions, plans, methods, processes, developmental or experimental products, intellectual property, software, databases, customer lists, vendor or supplier lists, marketing information, reports, business information, financial information, or other information related to your business or any of the employer's customers, clients, or consultants the employee has or may have access to under the terms of the agreement.
• Permitted disclosure. This clause explains when confidential information may be disclosed without violating the non-compete agreement. Common examples include when information is made public through no fault of the signing employee, when the signing employee discovers information on their own without a breach of another party, or when the employer provides written consent to release specific information to the public.
• Confidentiality. This clause states the employee acknowledges the information they may access is confidential. They agree they will not directly or indirectly communicate it to another party without the employer’s written consent. They also agree they will not use the information for any purpose other than to further the business without receiving written consent.
• Return of materials. This clause states that when the employment relationship terminates or when requested by the employer, the employee is required to promptly return all documents and other tangible materials that represent confidential information of the business and any existing copies. It also states that the employer will notify the employee if there is an unauthorized disclosure of confidential information.
• Remedies. This clause explains the legal remedies the employer may be entitled to pursue if the employee does not adhere to the terms of the agreement. Examples include the recovery of court costs and reasonable attorney fees, the award by a Washington court of a temporary restraining order or preliminary injunction against the unauthorized use, as well as other remedies available under Washington law or as a matter of equity.
• Choice of law. A choice of law provision states that the parties agree to choose Washington law (as this provision may not be used to avoid Washington law) to govern the agreement and any disagreements that may arise from it.
• Entire agreement. This last clause of the non-compete agreement states that the entire agreement may only be amended in writing, and only if both parties sign the amendment.

Both the employer and the employee must sign and print their name. Each signature should be dated. Each party should receive a copy of the executed agreement for their records.