If you are a resident of Washington State, or you plan to do business in the state, you may encounter the term “noncompetition agreement.” A noncompetition agreement, also known as a noncompete or covenant not to compete, is a legal agreement that restricts an employee from competing with their employer after their employment ends.
Washington State has some of the most stringent laws regarding noncompetition agreements in the United States. These laws are meant to protect employees’ ability to work and foster a competitive job market. Below, we’ll cover everything you need to know about noncompetition agreements in Washington State.
What is a noncompetition agreement?
A noncompetition agreement is a contractual agreement between an employer and employee that prohibits the employee from engaging in certain activities that would compete with the employer’s business. These activities can include working for a competitor or starting a competing business.
Typically, a noncompete agreement is signed at the beginning of an employee’s employment, as a condition of employment. However, in some cases, an employer may require an existing employee to sign a noncompete agreement as a condition of continued employment.
What are the requirements for a noncompetition agreement in Washington State?
Washington State law requires that noncompete agreements meet several requirements to be enforceable:
1. The noncompete agreement must be in writing and signed by both the employee and employer.
2. The noncompete agreement must be entered into at the beginning of the employment relationship, or the employee must receive additional consideration beyond their regular salary in exchange for signing the agreement.
3. The noncompete agreement must be reasonable in terms of its geographic and temporal scope. This means that the agreement must only restrict the employee from competing in a specific geographic area and for a specific period of time.
4. The noncompete agreement must protect a legitimate business interest, such as protecting trade secrets or confidential information.
What happens if a noncompetition agreement is violated in Washington State?
If an employee violates a noncompete agreement, the employer may take legal action. However, Washington State law limits the remedies that an employer can seek in a noncompete case.
For example, if an employer sues an employee for violating a noncompete agreement, the employer can only recover actual damages, such as lost profits or the cost of replacing the employee. The employer cannot recover attorney’s fees or punitive damages.
Additionally, if a court finds that a noncompete agreement is overly broad or unreasonable, the entire agreement may be deemed unenforceable.
Conclusion
Noncompetition agreements are a common practice in many industries, but they can have serious implications for employees’ ability to work and for the competitiveness of the job market. If you are an employer in Washington State, it’s important to ensure that any noncompete agreement you use meets the state’s strict requirements. If you are an employee in Washington State, it’s important to understand your rights regarding noncompetition agreements.
Remember, if you have questions about noncompetition agreements or need legal advice, it’s always best to consult with an experienced attorney who understands Washington State law.