Washington Gov. Bob Ferguson signed a bill into effect earlier this week that bans noncompete agreements across the state. The move marks a significant shift in employment law that will take effect on June 30, 2027.<\/p>\n
The measure prohibits contracts that restrict workers from joining or starting competing businesses after leaving a job. Noncompete agreements are commonly used in industries such as technology, health care, finance and sales, but they also extend to the mortgage space<\/a>, where loan officers sometimes sign noncompetes with compensation<\/a> tied to them.<\/p>\n Under the law<\/a>, noncompete agreements will be unenforceable for Washington<\/a>-based workers and businesses starting on the effective date. Employers will be barred from entering into new agreements and must notify current and former workers in writing by Oct. 1, 2027, that existing noncompete clauses are void.<\/p>\n The new state law also addresses nonsolicitation agreements. \u201cNonsolicitation agreements, which prohibit an employee from actively soliciting current customers or employees away from the employer, are not prohibited; however, the definition of nonsolicitation agreement must be narrowly construed,\u201d the legislation states.<\/p>\n According to reporting<\/a> from The Seattle Times and information from the Economic Innovation Group<\/strong>, Washington joins a small group of states that have enacted full bans on noncompete agreements, including California, North Dakota, Minnesota and Oklahoma.<\/p>\n Washington\u2019s move follows broader national efforts to curb noncompete agreements. During the Biden administration in 2024, the Federal Trade Commission <\/strong>(FTC) approved a nationwide ban<\/a>, but the rule was later rolled back after legal challenges from employers and trade groups.<\/p>\n The FTC, effective Feb. 12, 2026, published a final action in the Federal Register<\/a> that officially removed the Non-Compete Clause Rule (16 CFR Part 910) from the Code of Federal Regulations. Now, noncompete enforceability remains governed by state law, which builds upon the Trump administration<\/a>\u2018s decision to have the FTC take a case-by-case approach when evaluating noncompete clauses.<\/p>\n