By Roy Hibberd
With once-robust federal efforts by the Biden administration to ban most non-competition agreements now abandoned, the fight over the allowable scope and enforceability of these widely used restrictive covenants has returned to its historical state-level battlefield. Over the past several years, a growing number of states, including California, Minnesota, North Dakota, and Oklahoma, have severely limited or outright prohibited the use of non-competes. Recently, Washington state has jumped on the non-compete ban bandwagon, passing expansive legislation that effectively makes all such agreements void and unenforceable. And with similar legislation now pending in a receptive New Jersey legislature, the Garden State could prohibit non-competes as well.
Scope of Washington State Ban on Non-Competes
Signed into law by Washington Gov. Bob Ferguson on March 23, 2026, House Bill 1155 effectively prohibits the use of non-competition agreements for virtually all employees and independent contractors in the state, effective June 30, 2027. As of that date, employers will not be able to enforce any existing non-competes or enter into new ones, except as permitted by the exclusions discussed below.
The new law is an expansion of previously enacted legislation that restricted the use of non-competes for lower-wage workers. As noted in the text of the law, the earlier limitations on non-competes “did not go far enough” from the legislature’s perspective. HB 1155, in contrast, reflects the legislature’s intent “to ban noncompetition covenants for all Washington-based workers and businesses.”
The new law defines “noncompetition covenant” broadly to encompass a whole host of limitations on employees and contractors. Specifically, Washington state now prohibits:
- Every written or oral covenant, agreement, or contract that prohibits or restrains an employee or independent contractor from engaging in a lawful profession, trade, or business of any kind.
- An agreement that directly or indirectly prohibits the acceptance or transaction of business with a customer.
- Any provision in an agreement that threatens, demands, requires, or otherwise effectuates that an individual return, repay, or forfeit any right, benefit, or compensation, as a consequence of the individual engaging in a lawful profession, trade, or business of any kind.
The legislation specifically excludes several other common and related restrictive covenants from the ban. The following types of agreements, unless they constitute a non-compete under another name, remain valid and enforceable in Washington state:
- Non-solicitation agreements.
- Confidentiality agreements.
- Covenants prohibiting the use or disclosure of trade secrets or inventions.
- Covenants entered into by a person purchasing or selling the goodwill of a business or otherwise acquiring or disposing of an ownership interest, but only if the person signing the agreement is buying, selling, or otherwise acquiring or disposing of an ownership interest representing one percent or more of the business.
- Covenants entered into by a franchisee when the franchise sale complies with applicable Washington franchising law (RCW 19.100.0). While a franchisee buying/selling a unit may be restricted, the law targets restrictions on employees. Accordingly, franchise employees likely cannot be held to non-competes after the June 30, 2027, effective date.
Non-Solicitation Agreements Largely Remain Valid
As to non-solicitation agreements, the law places defined limits on when such provisions will be considered valid.
A valid and enforceable “Nonsolicitation agreement” is defined as an agreement between an employer and employee that prohibits solicitation by an employee, upon termination of employment:
- Of any employee of the employer to leave the employer; or
- Of any current or prospective customer, patient, or client of the employer to shift business away from the employer if the employee established or substantially developed a direct relationship with the customer, patient, client, or prospect through the employee’s work for the employer, and the prohibition expires no later than 18 months following termination of employment.
An agreement that directly or indirectly prohibits the acceptance or transaction of business with a customer, patient, or client is not considered a “nonsolicitation agreement.”
Notice Requirements and Remedies for Non-Compliance
By October 1, 2027, employers must make reasonable efforts to provide written notice to all current and former Washington employees and independent contractors whose non-competition covenant is still within its effective time period that their non-competition covenant is void and unenforceable.
Remedies for non-compliance with the ban can be severe. In addition to actions by the state attorney general, the law allows for a private right of action. Whether the action is brought by the attorney general or an aggrieved individual, a successful plaintiff can be awarded the greater of their actual damages or a statutory penalty of five thousand dollars, plus reasonable attorneys’ fees, expenses, and costs incurred in the proceeding.
2026 Could Be the Year New Jersey Bans Non-Competes
Legislation to ban or restrict non-competes in New Jersey has been introduced repeatedly over the past several years, but has not passed. The latest iteration of these efforts came in late 2025 with Assembly Bill No. 5708 (A5708) (introduced in the Senate as Senate Bill No. 4385). Those bills would have banned almost all non-competes except for those involving “senior executives” (executives earning a bit more than $150,000/year), but neither passed before the January 13, 2026, end of the legislative session.
With Democrats holding large majorities in both houses of the New Jersey legislature and a Democratic governor, all receptive to restrictions on non-competes, the losing streak for these bills may end this year.
If you have questions about the current non-compete state of play or specific concerns about your company’s use of non-competition agreements, please contact Roy Hibberd at Rhibberd@Ansell.Law.