CERTIFICATION OF ENROLLMENT
SUBSTITUTE SENATE BILL 5935
Chapter 36, Laws of 2024
68th Legislature
2024 Regular Session
NONCOMPETITION COVENANTS—VARIOUS PROVISIONS
EFFECTIVE DATE: June 6, 2024
Passed by the Senate February 6, 2024 CERTIFICATE
Yeas 29 Nays 20
I, Sarah Bannister, Secretary of
the Senate of the State of
DENNY HECK Washington, do hereby certify that
President of the Senate the attached is SUBSTITUTE SENATE
BILL 5935 as passed by the Senate
and the House of Representatives on
the dates hereon set forth.
Passed by the House February 22, 2024
Yeas 55 Nays 38
SARAH BANNISTER
LAURIE JINKINS Secretary
Speaker of the House of
Representatives
Approved March 13, 2024 11:27 AM FILED
March 14, 2024
Secretary of State
JAY INSLEE State of Washington
Governor of the State of Washington
 SUBSTITUTE SENATE BILL 5935
Passed Legislature - 2024 Regular Session
State of Washington 68th Legislature 2024 Regular Session
By Senate Labor & Commerce (originally sponsored by Senators
Stanford, Keiser, Conway, Dhingra, Frame, Kuderer, Liias, Nobles, and
Saldaña)
READ FIRST TIME 01/24/24.
1 AN ACT Relating to noncompetition covenants; and amending RCW
2 49.62.005, 49.62.010, 49.62.020, 49.62.050, 49.62.080, and 49.62.090.
3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
4 Sec. 1. RCW 49.62.005 and 2019 c 299 s 1 are each amended to
5 read as follows:
6 The legislature finds that ((workforce)):
7 (1) Workforce mobility is important to economic growth and
8 development((. Further, the legislature finds that agreements));
9 (2) Agreements limiting competition or hiring may be contracts of
10 adhesion that may be unreasonable; and
11 (3) The provisions in this chapter facilitating workforce
12 mobility and protecting employees and independent contractors need to
13 be liberally construed and exceptions narrowly construed.
14 Sec. 2. RCW 49.62.010 and 2019 c 299 s 2 are each amended to
15 read as follows:
16 The definitions in this section apply throughout this chapter
17 unless the context clearly requires otherwise.
18 (1) "Earnings" means the compensation reflected on box one of the
19 employee's United States internal revenue service form W-2 that is
20 paid to an employee over the prior year, or portion thereof for which
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 1 the employee was employed, annualized and calculated as of the
2 earlier of the date enforcement of the noncompetition covenant is
3 sought or the date of separation from employment. "Earnings" also
4 means payments reported on internal revenue service form 1099-MISC
5 for independent contractors.
6 (2) "Employee" and "employer" have the same meanings as in RCW
7 49.17.020.
8 (3) "Franchisor" and "franchisee" have the same meanings as in
9 RCW 19.100.010.
10 (4) "Noncompetition covenant" includes every written or oral
11 covenant, agreement, or contract by which an employee or independent
12 contractor is prohibited or restrained from engaging in a lawful
13 profession, trade, or business of any kind. A "noncompetition
14 covenant" also includes an agreement that directly or indirectly
15 prohibits the acceptance or transaction of business with a customer.
16 A "noncompetition covenant" does not include: (a) A nonsolicitation
17 agreement; (b) a confidentiality agreement; (c) a covenant
18 prohibiting use or disclosure of trade secrets or inventions; (d) a
19 covenant entered into by a person purchasing or selling the goodwill
20 of a business or otherwise acquiring or disposing of an ownership
21 interest, but only if the person signing the covenant purchases,
22 sells, acquires, or disposes of an interest representing one percent
23 or more of the business; or (e) a covenant entered into by a
24 franchisee when the franchise sale complies with RCW 19.100.020(1).
25 (5) "Nonsolicitation agreement" means an agreement between an
26 employer and employee that prohibits solicitation by an employee,
27 upon termination of employment: (a) Of any employee of the employer
28 to leave the employer; or (b) of any current customer of the employer
29 to cease or reduce the extent to which it is doing business with the
30 employer.
31 (6) "Party seeking enforcement" means the named plaintiff or
32 claimant in a proceeding to enforce a noncompetition covenant or the
33 defendant in an action for declaratory relief.
34 Sec. 3. RCW 49.62.020 and 2019 c 299 s 3 are each amended to
35 read as follows:
36 (1) A noncompetition covenant is void and unenforceable ((against
37 an employee)):
38 (a)(i) Unless the employer discloses the terms of the covenant in
39 writing to the prospective employee no later than the time of the
p. 2 SSB 5935.SL
 1 initial oral or written acceptance of the offer of employment and, if
2 the agreement becomes enforceable only at a later date due to changes
3 in the employee's compensation, the employer specifically discloses
4 that the agreement may be enforceable against the employee in the
5 future; or
6 (ii) If the covenant is entered into after the commencement of
7 employment, unless the employer provides independent consideration
8 for the covenant;
9 (b) Unless the employee's earnings from the party seeking
10 enforcement, when annualized, exceed one hundred thousand dollars per
11 year. This dollar amount must be adjusted annually in accordance with
12 RCW 49.62.040;
13 (c) If the employee is terminated as the result of a layoff,
14 unless enforcement of the noncompetition covenant includes
15 compensation equivalent to the employee's base salary at the time of
16 termination for the period of enforcement minus compensation earned
17 through subsequent employment during the period of enforcement.
18 (2) A court or arbitrator must presume that any noncompetition
19 covenant with a duration exceeding eighteen months after termination
20 of employment is unreasonable and unenforceable. A party seeking
21 enforcement may rebut the presumption by proving by clear and
22 convincing evidence that a duration longer than eighteen months is
23 necessary to protect the party's business or goodwill.
24 Sec. 4. RCW 49.62.050 and 2019 c 299 s 6 are each amended to
25 read as follows:
26 A provision in a noncompetition covenant signed by an employee or
27 independent contractor who is Washington-based is void and
28 unenforceable:
29 (1) If the covenant requires the employee or independent
30 contractor to adjudicate a noncompetition covenant outside of this
31 state; ((and))
32 (2) To the extent it deprives the employee or independent
33 contractor of the protections or benefits of this chapter; or
34 (3) If it allows or requires the application of choice of law
35 principles or the substantive law of any jurisdiction other than
36 Washington state.
37 Sec. 5. RCW 49.62.080 and 2019 c 299 s 9 are each amended to
38 read as follows:
p. 3 SSB 5935.SL
 1 (1) Upon a violation of this chapter, the attorney general, on
2 behalf of a person or persons, may pursue any and all relief. A
3 person aggrieved by a noncompetition covenant ((to which the person
4 is a party)) may bring a cause of action to pursue any and all relief
5 provided for in subsections (2) and (3) of this section.
6 (2) If a court or arbitrator determines that a noncompetition
7 covenant violates this chapter, the violator must pay the aggrieved
8 person the greater of his or her actual damages or a statutory
9 penalty of five thousand dollars, plus reasonable attorneys' fees,
10 expenses, and costs incurred in the proceeding.
11 (3) If a court or arbitrator reforms, rewrites, modifies, or only
12 partially enforces any noncompetition covenant, the party seeking
13 enforcement must pay the aggrieved person the greater of his or her
14 actual damages or a statutory penalty of five thousand dollars, plus
15 reasonable attorneys' fees, expenses, and costs incurred in the
16 proceeding.
17 (4) A cause of action may not be brought regarding a
18 noncompetition covenant signed prior to January 1, 2020, if the
19 noncompetition covenant is not being enforced or explicitly
20 leveraged.
21 Sec. 6. RCW 49.62.090 and 2019 c 299 s 10 are each amended to
22 read as follows:
23 (1)(a) Subject to (b) of this subsection, this chapter displaces
24 conflicting tort, restitutionary, contract, including contract
25 principles relating to discharge by assent or alteration, and other
26 laws of this state pertaining to liability for competition by
27 employees or independent contractors with their employers or
28 principals, as appropriate.
29 (b) This chapter does not amend or modify chapter 19.108 RCW.
30 (2) Except as otherwise provided in this chapter, this chapter
31 does not revoke, modify, or impede the development of the common law.
Passed by the Senate February 6, 2024.
Passed by the House February 22, 2024.
Approved by the Governor March 13, 2024.
Filed in Office of Secretary of State March 14, 2024.
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Statutes affected:
Original Bill: 49.62.005, 49.62.010, 49.62.020, 49.62.050, 49.62.080, 49.62.090
Substitute Bill: 49.62.005, 49.62.010, 49.62.020, 49.62.050, 49.62.080, 49.62.090
Bill as Passed Legislature: 49.62.005, 49.62.010, 49.62.020, 49.62.050, 49.62.080, 49.62.090
Session Law: 49.62.005, 49.62.010, 49.62.020, 49.62.050, 49.62.080, 49.62.090