If an employee is dismissed as a result of a dismissal, a non-compete agreement is void, unless the performance of the agreement includes compensation equal to the employee`s base salary for the performance period, less any remuneration derived from subsequent employment. Washington passed a law regulating the non-compete clause for employees, which went into effect in early 2020. One of the most important provisions of this bill is the income threshold. The non-compete obligation removes non-compete obligations for employees and contractors, unless their earnings exceed certain legal thresholds. Yes, but only for an employee or independent contractor whose annual income exceeds the current year`s break-even point of $101,390 and $253,475, respectively. As a result, most well-paid tech workers at companies like Amazon and Microsoft are not protected by the new law. This is because non-compete obligations make more sense if an outgoing employee or entrepreneur could join a competing company in exchange for unique trade secrets or other important proprietary information. Some lawmakers said Amazon lobbyists played a role in lowering the bill`s originally planned wage threshold from $180,000 to $100,000. It is therefore important to note the difference between a non-compete obligation and other restrictive agreements such as non-consolidation, confidentiality agreement, etc. If a court or arbitrator determines that a non-compete agreement violates the law, or if a court or arbitrator partially modifies or enforces a non-compete agreement, the employer must pay the injured party its actual damages or a fine of $5,000, whichever is greater, plus attorneys` fees and expenses.
We can help you design a non-compete clause or non-solicitation policy that complies with applicable laws and protects your business from legal penalties. Contact us today for help with your non-compete obligations. Any provision of a non-compete agreement that requires an out-of-state decision by a Washington-based employee or contractor is void and unenforceable. Provisions that deprive the employee or contractor of the protection of the law are also void and unenforceable. Yes, but there are a few caveats. While the law invalidates any non-compete obligation signed before January 1, 2020, injured employees cannot sue their employer and recover the $5,000 penalty or damages for a non-compete obligation before 2020, unless the employer actively enforces the agreement. If an employer causes its employees or contractors to sign a non-compete clause that violates the new law after January 1, 2020, they can sue and receive financial compensation, whether or not it is enforced. Changes have taken place for non-compete obligations in Washington State. In the spring of 2019, the Washington Legislature passed a bill limiting the use of non-compete obligations in Washington, and Governor Inslee signed the bill. The law comes into force on 1 January 2020 and can be found at RCW 49.62. If you signed a non-compete agreement after January 1, 2020 or if you have a non-compete obligation that needs to be revoked, reviewed or reviewed by a professional, call Emery Reddy. You won`t get better advice.
The revised Non-Competition Act, which entered into force on 1 January 2020, prohibits unfair non-compete obligations against low-wage workers by offering them a variety of new safeguards to unlock their economic potential. In the future, whether solicitation prohibitions are enforced will continue to depend on their relevance, a vague standard typically influenced by (1) the geographic scope of the restriction and (2) the duration of the restriction. Although the “adequacy standard” continues to apply to some extent to non-compete obligations, it will become less important given the more specific restrictions imposed by the new non-compete obligation. For example, a former employee who signed a non-solicitation agreement could not legally debauch the affairs of his former employer`s clients for a period of time. If they left the company with which they had signed an agreement, set up their own business and actively attracted customers from their former company, they could obtain a court injunction. An employer must independently consider an employee for an intermediate employment contract. This means that if an employer asks an employee to sign a non-compete obligation in the middle of the job or “mid-term”, “an independent audit is required at the time when non-compete commitments are made when the employment has already begun”. Labriola, 152 Wn.2d to 838. “Independent considerations may include higher salaries, promotion, bonus, a fixed period of employment, or perhaps access to protected information.” Id. at 834. Employees earning less than twice the applicable state minimum hourly wage may not be prevented from having additional employment, working as an independent contractor, or being self-employed. Starting in 2020, non-compete rules that do not meet certain standards will be invalid in Washington State.
New and existing non-compete obligations must comply with the new law. A “non-consolidation agreement” is narrowly defined as “an agreement between an employer and an employee that prohibits an employee from asking an employee to terminate the employment relationship: (a) an employee of the employer leaves the employer; or (b) a client of the employer to cease or reduce the extent to which he or she does business with the employer. If you plan to sign an employment contract with a commitment not to compete, or if you plan to leave your current employer but are unsure of what rights and obligations you have under your employment contract, contact an experienced employment lawyer immediately. Termination insurance: If an employer wants to enforce a non-compete clause against a dismissed employee, the company must now pay the employee its base salary as long as the agreement is in force, less any compensation the employee receives during the same period of subsequent employment. The measure, known as “garden leave,” provides workers with some form of insurance in the midst of layoffs. In Labriola, the employee signed a non-compete obligation five years after the start of his work for the employer; he had signed another non-competition clause when he began his work. The subsequent agreement prohibited the employee from working for a competitor within 75 miles of the employer for a period of three years after the end of the employment relationship. After the agreement was signed, Mr. Labriola remained an all-you-can-eat employee and received no additional benefits.
Id. at p. 831. The Washington Supreme Court issued a summary decision against Mr. Labriola, finding that the non-compete obligation was not validly closed because it was not supported by additional considerations. Id. at p. 842. The purpose of this bulletin is to provide an overview of recent changes to Washington`s law limiting employers` use of non-compete obligations. RcW 49.62 came into effect on January 1, 2020 and affects new and existing agreements with employees and independent contractors.
In recent years, the Washington legislature has shown a growing interest in crowding out the common law through non-compete obligations. Previous proposals would have restricted the application of non-compete obligations with employees in certain sectors and occupations (e.g. B doctors) as well as with hourly, part-time or temporary workers. Previous proposals would also probably have made longer non-compete agreements inappropriate. A separate termination obligation notice is also applied if the employee reaches less than the threshold at the time the agreement is signed, but the employer requires the employee to sign a non-compete agreement, as the employee may ultimately exceed the benchmark. The employer must then “expressly disclose that the agreement may be enforceable against the employee in the future.” RCW 49.62.020(1)(a)(i). But the new non-compete obligation has an answer to that. The new law nullifies any non-compete obligation that requires an employee or independent contractor to decide on a non-compete code outside of Washington.
It also invalidates any non-competition obligation that deprives an employee or an independent contract of the protection or benefits of this chapter. A non-solicitation agreement is a document in which the employee agrees not to actively poach customers or employees of a company for a certain period of time after leaving. Essentially, these agreements prevent former employees from “stealing” customers or talent. Employees who earn less than the non-compete minimum wage can continue to sign non-compete bans. While solicitation prohibitions are not as restrictive as non-compete clauses, they can still address some of employers` concerns. No loopholes: Employees are protected from outside the state who seek to circumvent the new competition rules by cancelling any agreement that requires a Washington employee or contractor to enter into the agreement outside of Washington or that is not subject to the law. One of the main objectives of the law is to prevent the use of non-compete obligations for low-level employees. To this end, the law nullifies non-compete obligations for any employee earning $100,000 or less per year. .