More freedom for Washington workers as noncompete contracts are challenged

In a groundbreaking move, the Federal Trade Commission (FTC) has swung its regulatory hammer, striking down nearly all non-compete agreements. But what does this seismic shift mean for Washington state workers? Let’s break it down.

The Ban and Its Implications

Non-compete clauses, those invisible shackles that bind employees to their current employers, have long been a contentious issue. Yesterday, the FTC took a bold step by banning these restrictive agreements. But before you breathe a sigh of relief, let’s delve into the specifics.

Who’s Affected?

If your employer ever slipped a noncompete clause into your employment contract, you’re not alone. These clauses typically prevent employees from taking similar jobs in the same field within a certain geographic area. But here’s the twist: the FTC’s ban applies nationwide, and Washington state is no exception.

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Washington’s Earnings Thresholds

Washington state has its own rules governing non-competes. Here’s the key: noncompete clauses cannot be enforced against individuals earning less than $120,000 annually. Yes, you read that right. If your paycheck’s lower than that, consider any noncompete clause about as binding as an oversized sweatshirt.

The Reality Check

Before you start drafting your resignation letter, let’s consult the data. According to census figures, the median income for single-person households in Washington was a modest $83,000 in 2023. For most workers, the FTC’s ban might not significantly change the game. The invisible ink of non-competes still binds you unless you’re among the fortunate high earners.

Legal Challenges Looming

The FTC’s ban, while a victory for employee rights, isn’t without controversy. Legal eagles are sharpening their quills, ready to spar in courtrooms. Challenges to the ban’s validity are expected, and the battle lines are drawn. Will the courts uphold this seismic shift, or will employers find loopholes to keep their non-competes intact?

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Washington’s Noncompete Law

Let’s dive into the nitty-gritty. Washington’s noncompete law lays out the ground rules:

1. Disclosure: Employers must reveal noncompete terms in writing to prospective employees during the job offer. The employer must explicitly warn the employee if the agreement becomes enforceable later due to compensation changes.
2. Earnings Threshold: Non-competes apply only if your annual earnings from the enforcing party exceed $100,000. Adjusted annually for inflation, this threshold ensures that high earners remain bound.
3. Layoff Protection: If you’re laid off, enforcement of the noncompete must include compensation equivalent to your base salary during the enforcement period, minus earnings from subsequent employment.
4. Duration Limits: Any noncompete lasting over eighteen months after termination is presumed unreasonable and unenforceable. Employers can rebut this presumption with clear evidence of necessity.

The Verdict

As the dust settles, Washington workers stand at a crossroads. The FTC’s ban is a beacon of hope if you are not an employer, but legal battles loom.

You can read more of Sam Campbell’s stories here. Follow Sam Campbell on X, formerly known as Twitter, or email him here.

Bill Kaczaraba is a content editor at MyNorthwest. You can read his stories here. Follow Bill on X, formerly known as Twitter, here and email him here.