On March 23, 2026, Washington’s Governor signed Engrossed Substitute House Bill 1155, effectively banning non-compete agreements in employment and independent contractor relationships. The ban goes into effect on June 30, 2027.
ESHB 1155 replaces the prior “limited use” framework with a restrictive law voiding non-competes regardless of compensation level, job title, or industry. The law doesn’t just prevent non-compete agreements moving forward, it retroactively annuls any such agreements currently in existence. The definition of a non-compete covenant under the new law is defined to include:
- Restricting workers from engaging in otherwise lawful business
- Restricting former employees from accepting or transacting business with customers
- Requiring former employees to repay, forfeit, or lose compensation earned if they engage in competing business
- Any restriction functioning as a direct or indirect deterrent to post-employment competition
There are a few exceptions to ESHB 1155. First, the new law does not prohibit narrowly defined non-solicitation agreements (within 18-months) or non-compete agreements related to the sale or acquisition of a business or ownership interest, so long as the value at issue is greater than one percent. ESHB also allows the continued protection of confidential information, proprietary data, and trade secrets, so employers may want to consider strengthening those protections in their policy handbooks.
Furthermore, ESHB also addresses training cost repayment agreements (TRAPs). While it would preserve pro-rated “stay or pay” agreements for educational expenses ending within 18 months of hire, ESHB will void any other clawback triggered by a former employee engaging in lawful “profession, trade, or business.”
To prepare for ESHB 1155, employers need to review their existing employment agreements, compensation plans, and handbooks to eliminate non-compete or TRAP covenants. Employers will also be required to provide written notice by October 1, 2027 to all current and former employees and independent contractors presently subject to a non-compete agreement.
Leech Tishman regularly advises employers on restrictive covenant issues, employment agreements, and compliance with evolving workplace laws. We are prepared to assist clients in assessing the implications of ESHB 1155, reviewing existing agreements and handbooks, and implementing appropriate compliance measures. For assistance or additional information, please contact Lydia A. Pappas at lpappas@leechtishman.com, attorney in Leech Tishman’s Labor & Employment Practice Group.