RCW 49.62: Washington Noncompete Threshold, Duration, and Penalties

Under Washington noncompete law, an employer can only enforce a noncompetition covenant against an employee earning at least $126,858.83 per year in 2026, and against an independent contractor earning at least $317,147.09 from that hiring party.¹ The rules live in RCW 49.62 and apply to every agreement signed on or after January 1, 2020. Older covenants also fall under the statute if the employer tries to enforce them or uses them as leverage.²

What Actually Counts as a Noncompete

The statute reaches only true noncompetition covenants: agreements that keep you from working for a competitor or starting a competing business. Several common workplace restrictions sit outside it entirely.

Non-solicitation agreements that block you from recruiting your former employer’s workers or poaching current customers
Confidentiality clauses covering proprietary business information
Trade secret and invention covenants tied to work you did during employment
Business-sale covenants signed by someone holding at least a one-percent ownership interest
Franchise-sale covenants that comply with Washington’s franchise investment protection rules²

The distinction matters because employers often bundle these into one document. If your agreement only stops you from soliciting former clients or sharing confidential information, the earnings threshold and other RCW 49.62 rules do not apply. If the same document also bars you from working for a competitor, that piece is subject to the full statute.

The Earnings Threshold for Employees

A noncompete is void unless the employee earns more than the annual threshold. For 2026 that number is $126,858.83, measured by the annualized compensation reported in Box 1 of your W-2.¹ If you earn less, no noncompete your employer asks you to sign can be enforced against you, no matter what the contract says.

The figure moves every year. RCW 49.62.040 requires the Department of Labor and Industries to adjust it annually for inflation using the CPI-W, with the new amount taking effect each January 1.³ An employer who drafts a covenant against last year’s threshold risks losing the whole agreement.

When the Agreement Must Be Presented

The employer has to disclose the terms of a noncompete in writing no later than the time you accept the job offer. Present it after you have already started working, and the covenant is void.⁴

Adding a noncompete after someone is already on the job is possible, but continued employment alone is not enough. The employer must provide independent consideration, meaning something of real value beyond keeping the job.⁵ Courts look for a meaningful change such as a raise, a bonus, or a genuine promotion. Handing an employee a new restriction at their annual review with no corresponding benefit leaves the covenant dead on arrival.

The 18-Month Duration Cap

Even when you clear the earnings threshold and the employer followed every notice rule, the restriction cannot run indefinitely. A court or arbitrator must presume that any noncompete lasting longer than 18 months after employment ends is unreasonable and unenforceable.⁴

The employer can try to overcome that presumption, but only by clear and convincing evidence that a longer duration is necessary to protect the business or its goodwill. Two- and three-year noncompetes rarely survive that test.

Layoffs and the Pay-Through Rule

If your employer terminates you as part of a layoff, the noncompete is void unless the employer keeps paying your base salary for the entire enforcement period.⁴ That compensation is offset by anything you earn from a new job during the restricted period.

The practical effect is that most employers back off enforcement against laid-off workers. Paying someone their old salary just to keep them away from a competitor is rarely worth it.

Independent Contractors

Independent contractors get an even higher bar. In 2026, a noncompete is only enforceable against a contractor whose annual earnings from the hiring party exceed $317,147.09.¹ The base amount in the statute is $250,000, adjusted each year for inflation.⁶ Earnings are measured by the annualized amount on the 1099-MISC from that contracting party. Below the threshold, any attempt to restrict a contractor from taking other clients is prohibited.

Out-of-State Venue and Choice of Law

Employers sometimes try to route noncompete disputes to another state or apply another state’s law. RCW 49.62.050 blocks that for Washington-based workers. A noncompete provision is void if it requires the worker to litigate outside Washington, deprives the worker of the protections in the chapter, or requires the application of another state’s laws.⁷ Even if your employment agreement says the contract is governed by Delaware law and all disputes will be resolved in Wilmington, those clauses fall away as applied to the noncompete.

Moonlighting and Second Jobs

Separate from noncompetes, RCW 49.62.070 prevents employers from restricting outside work for lower-wage employees. If you earn less than twice the state minimum wage, your employer cannot stop you from holding a second job, freelancing, or taking independent contract work in your off-hours.⁸ With Washington’s 2026 minimum wage at $17.13 per hour, this protection covers workers earning less than $34.26 per hour.⁹ The exceptions are narrow: an employer can limit outside work only when it raises legitimate safety concerns or creates an actual conflict of interest with the primary job.

What an Unlawful Noncompete Costs the Employer

If a court or arbitrator finds that a noncompete violates RCW 49.62, the employer owes the worker the greater of actual damages or a flat $5,000 statutory penalty, plus reasonable attorney fees, expenses, and costs.¹⁰

The same penalties apply when a court reforms or partially enforces an overbroad covenant instead of voiding it outright. That is a deliberate feature of the statute. In many states, employers face no downside from drafting an aggressive noncompete because courts simply trim it. Washington’s approach changes the calculus: even if the court rewrites the covenant, the employer still owes damages and fees.

A worker can bring the challenge without waiting to be sued. For covenants signed before January 1, 2020, though, a cause of action only exists when the employer is currently enforcing or explicitly leveraging the covenant.¹⁰ You cannot preemptively challenge an old noncompete that is only sitting in a file drawer.

Where Federal Law Stands

The Federal Trade Commission tried to ban most noncompetes nationwide in 2024, but a federal district court blocked the rule before it took effect. The FTC appealed, dropped the appeal in September 2025, and formally removed the rule in February 2026.¹¹ There is no federal ban in effect, so state law is what protects Washington workers, and RCW 49.62 does the work.

1
Washington State Department of Labor & Industries. Non-Compete Agreements
2
Washington State Legislature. Chapter 49.62 RCW Noncompetition Covenants
3
Washington State Legislature. Chapter 49.62 RCW Noncompetition Covenants – Section 49.62.040
4
Washington State Legislature. Washington Code Title 49 Chapter 49-62 Section 49-62-020
5
Washington State Legislature. Washington Code 49.62.020 – When Void and Unenforceable
6
Washington State Legislature. Chapter 49.62 RCW Noncompetition Covenants – Section 49.62.030
7
Washington State Legislature. Chapter 49.62 RCW Noncompetition Covenants – Section 49.62.050
8
Washington State Legislature. Washington Code 49.62.070
9
Washington State Department of Labor & Industries. Minimum Wage
10
Washington State Legislature. Chapter 49.62 RCW Noncompetition Covenants – Section 49.62.080
11
Federal Trade Commission. Noncompete Rule