Washington Supreme Court Says Employers May Not Unreasonably Restrain Employees From Working for Competitors

In a case of first impression, the Washington Supreme Court interpreted Washington law regarding noncompete agreements to broadly protect employees who earn less than twice the state minimum wage from unreasonable restrictions on obtaining supplemental employment and to narrowly permit employers to impose restrictions consistent with the common law duty of loyalty.

In Springer  v. Freedom Vans LLC (Wash. Jan 23, 2025) the issue before the court was RCW 49.62.070’s provision that governs an employer’s authority to restrict low-wage workers from obtaining additional employment. RCW 49.62.070(1) states:

“[A]n employer may not restrict, restrain, or prohibit an employee earning less than twice the applicable state minimum hourly wage from having an additional job, supplementing their income by working for another employer, working as an independent contractor, or being self-employed.”

However, the RCW 49.62.070(2)(b) provides an exception:

“[t]his section does not alter the obligations of an employee to an employer under existing law, including the common law duty of loyalty and laws preventing conflicts of interest and any corresponding policies addressing such obligations.”

Thus, the court stated, noncompete agreements in Washington are presumptively invalid for low-wage workers under RCW 49.62.070(1), and only narrow exceptions apply.

Guided by this tenet, the court concluded that allowing employers to restrict employees from providing any kind of assistance to competitors would subsume the Washington legislature’s intent to protect low-wage employees and would exceed the narrow construction of the duty of loyalty.

The Washington Supreme Court held that while employers may impose prohibitions that are consistent with the duty of loyalty, those prohibitions must be reasonable in light of the facts and specific provisions within the noncompete agreement and must be consistent with the legislature’s directive that the duty of loyalty be narrowly construed in the context of chapter 49.62 RCW.

“We interpret reasonableness in the context of this statute and its clearly stated intent. In other words, the kinds of competition prohibited must be narrow in the context of chapter 49.62 RCW and noncompete agreements must be reasonable.”

The court stated that “Reasonableness is decided on a case-by-case basis” and added that “In assessing reasonableness, courts consider factors such as whether there is a need to protect the employer’s business or goodwill, whether the restraint on the employee is reasonably necessary, and whether enforcing the noncompete agreement violates public policy.”

Key Takeaway

For employers with low-wage employees in Washington, it is critical to review employee agreements to determine whether company policies unreasonably prohibit or restrict employees from having an additional job, supplementing their income by working for another employer, working as an independent contractor, or being self-employed.

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