A non-compete clause is a common clause that you will see in a Washington employment agreement. The provision essentially prevents a former employee from working for another company in certain situations. Including a non-compete clause in your employment contract can work to effectively keep your competitors at bay.
What is a Non-Compete Provision?
A non-compete clause basically prevents a former employee from working for another company in the same industry. The provision restricts workers from acquiring job skills with one employer and then using those skills to the potential benefit of a competitor.
Washington State revised its non-compete laws in 2019. Under current law, a non-compete clause is valid between an employer and employee provided that:
- The employee earns more than $100,000 per year,
- The employer discloses all the terms of the clause during or before making an offer to the employee,
- The employer compensates employees that are laid off for the duration of the time when the employees are still subject to the non-compete provision, and
- The clause does not cover a period of time longer than 18 months.
Is a Non-Compete Clause the Same Thing as a Non-Solicitation Provision?
No. A non-solicitation clause is a different provision than a non-compete provision. A non-solicitation clause essentially prohibits an employee from solicitating the employer’s clients. These provisions are usually used by sales or service-related businesses since the income of these companies is tied to the relationships they have built with their clients.
The following points are usually included within a general non-solicitation clause:
- The employee must not divulge the name of any client to any party outside the company,
- The employee must not solicit or contact a company’s clients without the company’s written permission,
- The employee must not do anything that could interfere with the relationship between the company and its clients (for example, discuss the company’s current financial state), and
- The penalties if an employee violates the requirements within the provision.
Note that non-solicitation clauses are generally legal and enforceable if they are used for a valid reason. Examples of a valid reason are:
- The company has a client list that has a monetary value, and
- The company’s client list is worth protecting (for example, because it is custom built).
Contact The McWilliams Law Group for Help
When you are ready to open a new business, close a business, or take your current business to the next level, the lawyers at The McWilliams Law Group are here to help. We can help ensure that your operations provide you with the tax and liability protections that best fit your short- and long-term plans. Our attorneys work closely with business owners throughout Washington and California, providing individualized and strategic advice to help their businesses run smoothly. Contact us now and get the skilled business advice that you deserve.
