ENGROSSED SUBSTITUTE SENATE BILL 5526



State of Washington              52nd Legislature             1991 Regular Session


By Senate Committee on Commerce & Labor (originally sponsored by Senators Bauer, Newhouse, Moore, Nelson and Johnson).


Read first time March 6, 1991.Governing employee noncompetition clauses.

     AN ACT Relating to noncompetition agreements; and adding new sections to chapter 49.44 RCW.




     NEW SECTION.  Sec. 1.      The legislature declares that it is a policy of the state of Washington that workers receive consideration for entering into employee noncompetition agreements that affect their future working and business activities.


     NEW SECTION.  Sec. 2.      Unless the context clearly requires otherwise, the definitions in this section apply to sections 1 through 3 of this act.

     (1) "Employee" has the meaning of "worker" as defined in RCW 51.08.180, and also includes businesses and professionals regulated in Title 18 RCW, except as provided under RCW 51.08.180.

     (2) "Employer" has the meaning in RCW 51.08.070.

     (3) "Employee noncompetition agreement" means a reasonable agreement, written or oral, express or implied, between an employer and employee under which the employee agrees not to compete, either alone or as an employee of another, with the employer in providing products, processes, or services after termination of employment.


     NEW SECTION.  Sec. 3.      (1) Employee noncompetition agreements entered into in the state of Washington after December 31, 1991, are void and unenforceable by any court of this state unless:

     (a)(i) The agreement is entered into on initial employment of the employee by the employer; or

     (ii) Additional consideration is provided by the employer to the employee for entering into the agreement; and

     (b) The agreement is fair and reasonable under prior decisions of the courts of this state.

     (2) Continued employment by itself shall not be considered additional consideration for the purposes of subsection (1)(a)(ii) of this section.

     (3) Subsection (1) of this section applies only to employee noncompetition agreements made in the context of an employment relationship or contract.


     NEW SECTION.  Sec. 4.      Nothing in sections 1 through 3 of this act restricts the right of a person to protect trade secrets or other proprietary information by lawful means in equity or under applicable law.


     NEW SECTION.  Sec. 5.      The enactment of sections 1 through 3 of this act does not have the effect of terminating, or in any way modifying, any liability that is already in existence on the effective date of this act.


     NEW SECTION.  Sec. 6.      Unless there is a specific conflict with sections 1 through 3 of this act, the principles of law and equity shall be supplementary to these provisions.


     NEW SECTION.  Sec. 7.      Sections 1 through 6 of this act are each added to chapter 49.44 RCW.