S-1898.1          _______________________________________________


                            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 enter into employee noncompetition agreements fully understanding how their future working and business activities may be affected.  Therefore, the legislature requires that employee noncompetition agreements entered into after July 1, 1991, shall provide conspicuous written notice to both parties of the effect of the agreement and that advises the parties to seek legal counsel prior to entering into the agreement.


     NEW SECTION.  Sec. 2.      Unless the context clearly requires otherwise, the definitions in this section apply to sections 1 through 4 of this act.

     (1) "Employee" has the meaning of "worker" as defined in RCW 51.08.180, and shall also include 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 after July 1, 1991, are void and unenforceable by any court of this state unless:

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

     (b) The agreement is entered into on subsequent bona fide advancement of the employee with the employer; and

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

     (2) 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.      An employer shall print, or cause to be printed, before the text of the employee noncompetition agreement, in conspicuous language of not less than ten point type, the following language:


     "This agreement includes provisions that restrict your future right to engage in certain employment or business activities in some or all of the state of Washington.  Before signing this agreement you are advised and encouraged to seek competent legal counsel."



     NEW SECTION.  Sec. 5.      Nothing in sections 1 through 4 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. 6.      The enactment of sections 1 through 4 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. 7.      Unless there is a specific conflict with sections 1 through 4 of this act, the principles of law and equity shall be supplementary to these provisions.


     NEW SECTION.  Sec. 8.      Sections 1 through 7 of this act are each added to chapter 49.44 RCW.