Last week, we reported on new Virginia legislation that would strictly limit the use of noncompetition agreements with employees in that state. Around the same time, the Washington state legislature sent Governor Bob Ferguson legislation that would prohibit the use of most noncompete-like restrictions in that state. The act voids existing and new noncompete agreements with employees beginning June 30, 2027. The definition of prohibited noncompetes includes those included in stockholder or other equity agreements with employees.

Like most recent state prohibitions, the Washington legislation includes a few exceptions. It would allow noncompetes entered into as part of a business sale. It also would not affect trade secret or confidential information agreements with employees. The act allows customer and prospective customer non-solicitation agreements. But it limits them to 18 months, and the exception only applies to employees who developed direct business relationships with those customers. Employees with only knowledge of customers or indirect customer relationships would not be bound by the restrictions.

Given Washington’s large technology sector, this legislation would have a significant impact on employers’ ability to recruit from competitors’ workforces. Recent state noncompete bans have passed in both red and blue states, with similar limitations enacted for different political motives. More liberal states view noncompetes as restricting worker rights and giving employers unreasonable leverage over employee mobility and compensation. Conservative states have passed noncompete bans for similar reasons but often use free market concepts to justify giving employees the ability to market their skills to other companies.

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