SB 6522 — Limiting noncompetition agreements.

S-4706.1SUBSTITUTES-4139.1SENATE SENATE BILL 6522State of Washington65th Legislature2018 Regular SessionBy Senate Labor & Commerce (originally sponsored by Senators Liias and Fain)READFainAN FIRST TIME 02/02/18.AN ACT Relating to protecting workers from work restrictions;

Further, the legislature finds that agreements limiting competition or hiring are frequently contracts of adhesion that may be unreasonable.NEW SECTION.  Sec. 2.  A new section is added to chapter 49.44 RCW to read as follows:(1) For a noncompetition agreement to be enforceable, the employer must disclose the terms of the agreement in writing to the prospective employee no later than the time of the acceptance of the offer of employment or, if the agreement is entered into after the commencement of employment, the employer must provide independent consideration for the agreement.(2) A noncompetition agreement is unreasonable, and void and unenforceable:(a) If the annual compensation, excluding benefits, of the employee is less than threefive times the average weekly wage as established under RCW 50.04.355 at the time of entering into the contract.(b) If the employee is terminated dueduring to a reductionprobationary inperiod force,or unlesswithout enforcementjust ofcause, theincluding noncompetitiondue agreement includes compensation during the period of enforcement equivalent to thea employee'sreduction fullin salaryforce.(3) during the four quarters of employment with that employer prior to enforcement.(3) A rebuttable presumption is established that a noncompetition agreement is unreasonable and void and unenforceable for any period of time beyond a one year duration.

A party to the agreement may rebut the presumption with clear and convincing evidence that the duration beyond one year is reasonably necessary to protect the business or goodwill of the party.(4) ATo provisionbe inenforceable, a contract or agreement signed by an employee who primarily resides and works in Washington state is void and unenforceable if it deprives the employee of the substantive protection of Washington law.(5) A noncompetition agreement betweenmust abe performersupported andby a performance"garden space,leave orclause" aunder thirdwhich party scheduling the performer for a performance space, may not restrict the performer from performing in a geographic region for a period longer than three days.(6) A noncompetition agreement between an entity engaging an independent contractor and an independent contractor is void and unenforceable.(7) Except as otherwise expressly provided, this section does not revoke, modify, or impede the development of the common law.(8) This section applies to noncompetition agreements entered into on or after the effective date of this section.NEW SECTION.  Sec. 3.  A new section is added to chapter 49.44 RCW to read as follows:An employer mayagrees not restrict, restrain, or prohibit an employee working fewer than forty hours per week or earning less than two hundred percent of the applicable state or local minimum wage from having an additional job, supplementing their income by working for another employer, working as an independent contractor, or being self-employed.NEW SECTION.  Sec. 4.  A new section is added to chaptercontinue 49.44 RCW to readpay as follows:The definitions in this section apply throughout sections 1 through 3 of this act unless the contextemployee clearlywages requiresduring otherwise.(1) "Employee" and "employer" have the samerestricted meaningsperiod. as in RCW 49.17.020.(2) "Noncompetition agreement" includes every written or oral covenant, agreement, or contract by which an employee is prohibited or restrained from engaging in a lawful profession, trade, or business of any kind.

The amount of the wages shall be based on the average of wages reported to the employment security department for the four quarters prior to the restricted period, prorated to the employer's pay period.

If the employee worked for the employer for less than the entirety of four complete quarters, the average shall be based on the quarters for which the employee worked the entirety of the quarter or quarters.

An employer may not restrict an employee from employment while receiving garden leave if the employment is consistent with a reasonable noncompetition agreement that is consistent with this section.(5) A provision in a contract or agreement signed by an employee who primarily resides and works in the state is void and unenforceable if it requires the employee to adjudicate a noncompetition agreement outside of the state.(6) A provision in a contract or agreement signed by an employee who primarily resides and works in Washington state is void and unenforceable if it deprives the employee of the substantive protection of Washington law.(7) Any enforcement or attempted enforcement of a noncompetition agreement that violates this section, or is overly broad or only partially enforceable, affects the public interest and constitutes a per se unfair or deceptive act or practice under chapter 19.86 RCW.(8) A noncompetition agreement between a performer and a performance space, or a third party scheduling the performer for a performance space, may not restrict the performer from performing in a geographic region for a period longer than three days.(9) A noncompetition agreement between an entity engaging an independent contractor and an independent contractor is void and unenforceable.(10) Except as otherwise expressly provided, this section does not revoke, modify, or impede the development of the common law.(11) This section applies to noncompetition agreements entered into on or after the effective date of this section.NEW SECTION.  Sec. 3.  A new section is added to chapter 49.44 RCW to read as follows:An employer may not restrict, restrain, or prohibit an employee working fewer than forty hours per week or earning less than two hundred percent of the applicable state or local minimum wage from having an additional job, supplementing their income by working for another employer, working as an independent contractor, or being self-employed.NEW SECTION.  Sec. 4.  A new section is added to chapter 49.44 RCW to read as follows:The definitions in this section apply throughout sections 1 through 3 of this act unless the context clearly requires otherwise.(1) "Employee" and "employer" have the same meanings as in RCW 49.17.020.(2) "Noncompetition agreement" includes every written or oral covenant, agreement, or contract by which an employee is prohibited or restrained from engaging in a lawful profession, trade, or business of any kind.