The 2019 non-compete obligation expressly excludes non-solicitation prohibitions from being subject to restrictions on non-compete obligations (except between franchisors and franchisees). This is remarkable because Washington courts have in the past applied the same legal standard to non-competition clauses and non-compete prohibitions. That is, the courts have applied these types of agreements as long as they are « reasonable ». As mentioned earlier, prior to the new law, the duration was analyzed on a case-by-case basis to determine whether it was appropriate. Now, according to RCW 49.62, there is a rebuttable presumption that non-compete obligations longer than eighteen (18) months are considered inappropriate unless the employer can demonstrate through clear and convincing evidence that a longer term is necessary. RCW 49.62 clarifies the limitations of existing law and introduces new requirements for non-compete obligations into Washington law. Each legal issue is unique. Therefore, the information contained in this blog is intended to be general educational material and not legal advice. If you think you have a legal problem, you should consult a lawyer. If there are unique trade secrets or important proprietary information, some sort of non-compete obligation may make sense.
What. Hard to believe is that the 14% of workers who earn less than $40,000 a year and are forced to sign these agreements have special proprietary information. Non-compete obligations have left the high-tech realm and have been applied to food service employees, security personnel and even delivery people. Colin F. McHugh is an employment lawyer in Vancouver, Washington, and has reviewed, drafted, negotiated, negotiated and reviewed numerous employment contracts with non-compete obligations and other restrictive agreements. 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. A non-compete clause is a contract that allows employers to prevent employees who sign agreements from obtaining similar employment with a company that competes with their current employer.
In other words, workers are not allowed to use the professional skills they have acquired to look for a job in the same market. The agreements are particularly restrictive for low-wage workers who do not have the luxury of moving into a new market or acquiring new skills with each job change. Given this change in the law, employers are likely to be discouraged from filing complaints to enforce non-compete obligations if they are too broad or lack key terms as interpreted by the Washington law. Employers are much less likely to try to enforce these overly broad agreements because of this new provision, as they can now be penalized for attempting to enforce such excessive agreements. The new legal non-compete obligations are prudent. Non-compete obligations can be useful tools to protect trade secrets, proprietary information and invest in specific employees, but recently they have been abused. This law will ensure an essential alignment of the conditions of competition between employers and employees. 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. The fundamental purpose of non-compete obligations is to help employers prevent employers from receiving confidential information on a Monday and from passing on their knowledge to a competitor on a Tuesday. This justification becomes much less convincing when the employee is hired on a Monday, fired on a Tuesday, and then says he cannot work for a competitor for the next 18 months. Similarly, the 2019 non-compete obligation expressly excludes that confidentiality and non-disclosure agreements are subject to its restrictions, in particular those relating to trade secrets or inventions.
While worth mentioning, it is less a deviation from the status quo than the exclusion of non-solicitation prohibitions. Indeed, the « adequacy standard » used for non-compete obligations and solicitation prohibitions has not been applied to confidentiality agreements in the past. 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. If you need help drafting a non-compete or non-solicitation agreement, you should contact an employment lawyer. An experienced professional can help you understand your legal rights. You can also draft a new agreement that meets all the legal requirements for businesses and employees in your state. After the law comes into force, employers will not be able to enforce non-compete obligations that violate the restrictions of the law, even if the non-compete obligation was signed before January 1, 2020. As a result, many employers will need to consider offering less restrictive non-compete clauses to key employees to ensure compliance with future restrictions.
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 act nullifies non-compete obligations for any employee earning $100,000 or less per year. It makes sense to set an income limit for the use of non-compete obligations. There is rarely a good reason why a low-level employee should be subject to a non-compete clause, as noted in the Senate draft report for CSE 5478: Before the new law, many employers tried to prevent low-wage workers from having non-compete obligations. In order to create a level playing field, the legislator introduced a wage requirement for employees and independent contractors, who must be subject to a non-compete obligation. In fact, this provides for an 18-month period for non-compete obligations. The high burden of proof required to demonstrate the need for a longer non-compete obligation, combined with the uncertainty and costs of litigation, will discourage almost all employers from trying to include a longer non-compete obligation in the agreement. Note: The law also provides for a 3-day period for non-competitions related to performers such as musicians. Senate Bill ESSB report 5478 highlights the reasons for this, noting that « in the music industry, non-compete clauses or blackout dates each year impair the ability to cobble together a livelihood. » Income limits: One of the main objectives of the new law was to prevent employers from applying non-compete obligations to employees at a lower level. The law waived non-compete obligations for W-2 employees earning less than $100,000 per year and independent contractors earning less than $250,000 per year in 2020. .