Washington employers should begin preparing for a significant shift in how they protect their business interests. In March 2026, Governor Bob Ferguson signed legislation that will effectively ban noncompetition agreements in the state, with the law set to take effect on June 30, 2027.
While that date may feel distant, the impact is substantial—and employers should not wait to evaluate their current agreements and strategies.
A Full Shift Away from Non-compete Agreements
The new law declares noncompetition agreements void and unenforceable, regardless of when they were signed. This means that even existing agreements currently in place will no longer be valid once the law takes effect.
In addition, employers will be prohibited not only from enforcing a noncompete agreement, but also from attempting to enforce them or representing to employees that such agreements apply. There is also a forthcoming requirement to notify current and former employees that any existing noncompete agreements are no longer enforceable.
The takeaway is clear: non-compete agreements will no longer be a viable tool for Washington employers.
Expanded Definition: More Than Just Traditional Noncompete
One of the more impactful aspects of this legislation is the expanded definition of what qualifies as a non-compete agreement.
The law goes beyond traditional restrictions on working for competitors and includes provisions that require employees to forfeit compensation or repay certain benefits if they engage in competitive work. This could affect common compensation structures such as equity forfeiture provisions, repayment of bonuses or incentives, or sign-on repayment terms if they are tied to post-employment competition.
Employers should take a close look at these types of provisions, as they may fall within the scope of the ban.
Updates to Non-Solicitation Agreements
While non-compete agreements are being eliminated, non-solicitation agreements remain permissible—but with clearer limitations.
Under the new law:
- Non-solicitation agreements may restrict former employees from soliciting coworkers.
- Restrictions on customers, patients, or clients are limited to those with whom the employee had a direct relationship that they established or substantially developed during their employment.
- These agreements may not exceed 18 months in duration.
- Importantly, they cannot be used to prevent a former employee from accepting business if a client independently chooses to follow them.
This reinforces that non-solicitation agreements must be narrowly tailored and focused on protecting legitimate business relationships—not functioning as a substitute for non-compete agreements.
Tuition Reimbursement Agreements: Narrowly Defined
The legislation also provides a limited path forward for tuition reimbursement agreements, but with specific guardrails.
To remain enforceable, these agreements must:
- Expire within 18 months of the employee’s start date
- Require repayment on a prorated basis
- Waive repayment obligations if the employee leaves for “good cause,” as defined under Washington law
These requirements are more structured than what many employers currently use, and existing agreements may need to be revised to align with the new standards.
What About NDAs?
Confidentiality agreements, including non-disclosure agreements (NDAs), remain a critical and permissible tool for employers.
Employers may continue to protect:
- Trade secrets
- Proprietary business information
- Confidential processes and data
However, it is important that these agreements are carefully drafted. If an NDA includes provisions that effectively restrict an employee from working for a competitor—or penalize them for doing so—it could be interpreted as a non-compete agreement under the expanded definition.
In short, NDAs are still valid, but they must be focused on protecting information, not restricting employment.
Final Thoughts
This legislation represents a fundamental shift in Washington’s approach to restrictive covenants. Employers will need to move away from relying on non-compete agreements and instead focus on well-structured non-solicitation agreements, compliant reimbursement programs, and strong confidentiality protections.
Taking a proactive approach now will help avoid compliance risks and ensure your agreements remain enforceable when the law takes effect.
How JB Consulting Systems Can Help
JB Consulting Systems is available to assist in reviewing and revising your handbook, if necessary, tuition reimbursement structures, and confidentiality provisions. Non-Solicitation and trade secret protection agreements should be altered by an employment law and/or business attorney to ensure your specific business needs are covered. If you need a referral to an attorney, we are happy to provide you with some options.