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Finally, after months of waiting, my Girl Scout Cookie order was delivered by my cousin 鈥� 70聽boxes. This has been going on now for seven years. You see, seven years ago I foolishly made a statement that I would 鈥渦p my order each year.鈥� What I thought was a couple-year commitment to copious amounts of Thin Mints and Samoas turned out to be a lie. I had no idea she鈥檇 still be selling cookies while in high school. But alas, I am likely her top customer (and if I am not, then she needs to do a better job upselling me) and the exact type of 鈥渃lient鈥� that companies seek to protect through non-competition agreements. And that鈥檚 really the point.

Because at its core, every non-compete is trying to do the same thing: protect relationships like this one. Predictable. Repeat. Built over time. The kind of customer you don鈥檛 want to walk out the door the minute an employee does. Unfortunately for employers, Washington just set an expiration date for non-competes. Under a new law signed March 23 by Gov. Bob Ferguson, employers won鈥檛 be able to use them starting in June 2027 鈥� and they鈥檒l also have to provide specific notices by October聽2027. Outlined below is a summary of the new law and three things you can do to prepare.

The law

Starting June 30, 2027, non-competes in Washington don鈥檛 just become limited 鈥� they effectively disappear. Existing agreements become null and void for Washington-based workers, including independent contractors. The law defines non-competition as any agreement 鈥渢hat prohibits or restrains an employee or independent contractor from engaging in a lawful profession, trade, or business of any kind.鈥� The definition also covers any agreement 鈥渢hat directly or indirectly prohibits the acceptance or transaction of business with a customer;鈥� or 鈥渢hat threatens, demands, requires, or otherwise effectuates that an individual return, repay, or forfeit any right, benefit, or compensation, as a consequence of the individual engaging in a lawful profession, trade, or business of any kind.鈥�

There are two narrow carve-outs. First, if the non-competition agreement is tied to the sale of a business 鈥� and the person involved is buying, selling, or transferring at least a 1 percent ownership interest 鈥� it can still hold. Second, the law clarifies that non-solicitation, confidentiality, and certain training repayment pacts are allowed. However, the law requires the non-solicitation agreements be narrowly construed and meet its specified definition. Failure to work with counsel and narrowly construe a non-solicitation agreement could result in a court ruling the non-solicitation agreement is actually a non-competition agreement, which is void under this law.

Three action items

Employers also have an affirmative obligation. By Oct. 1, 2027, they need to notify both current and former employees (and contractors) who are still subject to these agreements that they are no longer enforceable.

1. Audit your agreements. Go find everything: employment agreements, offer letters, policies 鈥� anything with restrictive language. Identify the non-competes, flag the non-solicits, and figure out who鈥檚 sitting under what and who will need to be sent a notice that their non-compete is void.
2. Fix it. Ask yourself which restrictive covenants need to be updated and whether there are any current employees you need to get under an enforceable non-solicitation agreement. Work with counsel to create an agreement that can be enforceable after June 2027.
3. Don鈥檛 play with fire. Employers face significant exposure if they threaten to enforce, attempt to enforce, or really enforce a prohibited non-compete.

I鈥檝e spent seven years accidentally fueling my cousin鈥檚 cookie empire, and I鈥檓 still showing up for every box. It turns out that the Washington Legislature (and possibly Oregon鈥檚 in the future) does not want companies鈥� restrictive covenants to keep growing unchecked the same way. Washington is saying protect your relationships. But don鈥檛 try to lock people out of work, because if you do, someone鈥檚 going to legally be able to come for those Thin Mints 鈥� and your clients.

Stephen Scott is a partner in the Portland office of Fisher Phillips, a national firm dedicated to representing employers鈥� interests in all aspects of workplace law. Contact him at 503-205-8094 or [email protected].

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the author and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither the author nor the 91视频 guarantees the accuracy or completeness of any information published herein.