Committee weighs bill to void noncompetition agreements and require employer notices

Senate Bill 5,437 (proposed substitute) would make noncompetition covenants void and unenforceable regardless of when they were signed, expand the definition of prohibited covenants, and require employers to provide written notice by Oct. 1, 2026 that such agreements are void.

Committee staff outlined the changes: the substitute adds an intent section, updates an effective date and removes the current earnings thresholds used to determine enforceability. Susan Jones summarized available remedies in the substitute, including a private cause of action for an aggrieved person with potential statutory damages of $5,000 plus attorney fees and costs.

Supporters, including labor councils and employee‑advocacy groups, told the committee noncompetes limit mobility, suppress entrepreneurship and disproportionately harm workers who cannot negotiate terms. "This bill would end the unfair and anti‑competitive practice of finding workers to their employers," said Carissa Larson of the Washington State Labor Council. Employee witnesses described individual harms and litigation risk when employers litigate noncompetes across state lines.

Business, industry and health‑system witnesses urged caution and narrower scope. Employers said noncompetes can protect substantial long‑term investments, confidential business information and patient continuity in health systems, and they recommended preserving narrow exemptions for senior executives and limiting post‑employment restrictions. Trade witnesses also raised concerns about the bill’s effect on current employees and franchisor relationships.

Committee members asked about which existing thresholds would be removed and about litigation and enforcement mechanics. No final committee action was taken; the record included many written sign‑ins on both sides of the issue.