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Washington State Updates and Clarifies Washington Law Regarding Restrictive Covenants  

08 May

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Update Applicable to:Effective date
All employers with at least 1 worker in Washington StateJune 6, 2024


What happened?

On March 13, 2024, Governor Jay Inslee signed Substitute Senate Bill (S.S.B.) 5935 which updated and clarified Washington law regarding restrictive covenants (RCW 49.62 et seq.).


What are the details?

The legislation provides that a “noncompetition covenant” also includes “…an agreement that directly or indirectly prohibits the acceptance or transaction of business with a customer.”


Key changes

The objective of the amendment was to clarify some provisions that, according to the legislators, the courts have “misconstrued or misinterpreted,” with the added effect of making it more employee friendly.


Business Considerations

  • Employers with Washington-based workers and independent contractors should be aware of the updates to the law regarding restrictive covenants and should consider reviewing and updating their provisions.
  • Employers should exercise caution when enforcing agreements made before 2020.
  • Employers should reassess existing agreements with their employees and independent contractors to ensure enforceability.
  • Employers operating in Washington that have or are considering non-compete or non-servicing agreements with their employees or contractors, or are thinking about hiring individuals who have such agreements with other employers, should understand the implications of these changes.
  • Employers should also revise any policies, practices, procedures, and communications used with departing employees to prevent any situation that could be seen as “explicitly leveraging” pre-2020 covenants that are now in violation of the statute.


Source References


Resources

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This communication is intended solely for the purpose of conveying information. The present post might incorporate hyperlinks directing readers to websites managed by third-party entities. The inclusion of any links within this communication is meant to serve as points of reference and could encompass opinion articles from various law firms, articles from HR associations, official websites, news releases, and documents of government agencies, and other relevant third-party sources. Vensure has no authority over these external websites and bears no responsibility for their content. Furthermore, Vensure does not endorse the materials present on these websites. The contents of this communication should not be interpreted as legal advice or as a legal standpoint concerning specific facts or scenarios. Nor should it be deemed an exhaustive compilation of facts potentially pertinent to federal, state, or local laws. It is strongly advised that employers solicit legal guidance from an employment attorney when undertaking actions in response to any legal updates provided. This is due to the possibility of future alterations occurring in federal, state, and local laws, regulations, as well as the directives and guidelines issued by governing agencies. These changes may transpire at any given time, potentially rendering certain portions of the content within this update void or inaccurate.

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