SENATE BILL REPORT
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.
As of February 13, 2017
Title: An act relating to noncompetition agreements.
Brief Description: Addressing noncompetition agreements.
Sponsors: Senators Pearson, Frockt, Hasegawa and Hunt.
Committee Activity: Commerce, Labor & Sports: 2/15/17.
SENATE COMMITTEE ON COMMERCE, LABOR & SPORTS
Staff: Susan Jones (786-7404)
Background: Noncompetition agreements or clauses are provisions in an employment contract that impose post-employment restrictions on an employee. Typically, a noncompetition agreement restricts a person's ability to work within a specific geographic area, or industry, for a specific period of time.
Courts in Washington enforce reasonable noncompetition agreements, taking into consideration the following three factors:
whether the agreement is necessary to protect a legitimate business interest;
whether the agreement is any broader than reasonably necessary to secure the employer's business or goodwill; and
whether the loss of the employee's services or skills injures the public to such a degree that the agreement should not be enforced.
Washington law provides that noncompetition agreements are void with respect to certain broadcast industry employees.
A number of states have laws restricting the use of noncompetition agreements in some situations.
Summary of Bill: A noncompetition agreement between an employer and an employee is void if the employee's compensation, excluding benefits, is less than $55,000 per year. The amount is adjusted for inflation.
If an employer enforces or attempts to enforce a void noncompetition agreement, the employee may recover the actual damages, together with statutory damages of $5,000 and reasonable attorneys' fees.
Fiscal Note: Not requested.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: Ninety days after adjournment of session in which bill is passed.