Covenants Not to Compete Under Washington Law

Here's what you need to know.

  • Washington courts view covenants not to compete as restraints of trade, and will consider the ramifications of the covenant so as not to unduly burden competition.
  • The agreement must not be greater than reasonably necessary to protect the business or goodwill of the employer.
  • The courts will also consider the possible injury to the public from the particular covenant being considered. In other words, one might be unenforceable if it unduly restricts the public's access to valuable skills or services.
  • Washington courts have the power to modify a covenant not to compete by limiting its scope or duration to the minimum needed to protect the employer's legitimate business interests.

Stated another way, courts in Washington will utilize a three-factor test to determine if a non-competition agreement is reasonable:

  • Is the restraint necessary for the protection of the business or goodwill of the employer?
  • Does the restraint impose upon the employee any greater restraint than is reasonably necessary to secure the employer's business or goodwill?
  • Is the public injured to such a degree by not having access to the services and skills of the employee, or is the employee injured by not being able to stay employed, that these injuries outweigh the benefit of the covenant to the employer?

Unlike Oregon, there are no rules in Washington about when a covenant should be entered into in order to be enforceable. In one case, the Washington Court of Appeals upheld a non-compete agreement that was disclosed to new employees after they started work for their new employer. The Court found that the promise of continued employment and training were sufficient consideration to enforce the non-compete agreement. The same result would probably not have occurred in Oregon.

The bottom line? Be reasonable, and think about the impact that the restriction would have on the general public and the employee's future employment prospects. If either the public or the employee will be harmed by the non-compete agreement, it may be too harsh to withstand judicial scrutiny in Washington.