Substitute Senate Bill 5437 (69th Legislature, 2026) amends and repeals parts of chapter 49.62 RCW and related provisions to prohibit noncompetition covenants for Washington workers. The bill broadens the statutory definition of "noncompetition covenant" to include written or oral agreements that bar an employee or independent contractor from engaging in a lawful profession, trade, or business; covenants between performers and performance spaces or schedulers that bar lawful performance; agreements that prohibit accepting or transacting business with a customer; and provisions that require repayment, forfeiture, or loss of compensation as a consequence of engaging in lawful work. It expressly excludes nonsolicitation agreements, confidentiality agreements, covenants protecting trade secrets or inventions, certain covenants tied to the sale or transfer of business ownership interests (one percent or more), and franchise covenants that meet RCW 19.100.020(1). The bill also narrows the definition of nonsolicitation and clarifies that an agreement prohibiting acceptance or transaction of business with a customer is not a nonsolicitation agreement. The act makes all noncompetition covenants void and unenforceable as of the effective date, prohibits employers from enforcing, attempting to enforce, threatening to enforce, representing that an employee is subject to, or entering into or attempting to enter into noncompetition covenants, and requires employers to provide written notice by October 1, 2027 to current and former employees and independent contractors whose contracts include noncompetition covenants that the covenants are void. It authorizes the attorney general to seek relief for violations and allows aggrieved persons to bring a cause of action; a violator must pay the greater of actual damages or a statutory penalty of $5,000 plus reasonable attorneys' fees, expenses, and costs if a court or arbitrator finds a violation. The chapter is to be liberally construed in favor of workforce mobility and exceptions narrowly construed, and it displaces conflicting state tort, restitutionary, contract, and other laws related to employee or contractor competition while not changing chapter 19.108 RCW. The bill amends RCW 49.62.005, 49.62.010, 49.62.020, 49.62.080, 49.62.090, and 49.62.100, repeals RCW 49.62.030, 49.62.040, and 49.44.190, and creates at least one new section. Sections .010, .020, .080, and .090 apply to proceedings commenced on or after the act’s effective date, with proceedings already under way governed by prior law. The act’s effective date is June 30, 2027. Some text from the bill is missing in the provided extracts: the full content of Sec. 8 is cut off and the full language of the repealed RCWs is not included here, so any additional provisions contained in those parts are not available for summary.

If enacted, Washington employers would no longer be able to use or enforce noncompetition agreements against employees or independent contractors statewide: existing noncompetes would be void as of the act’s effective date (June 30, 2027), employers must give written notice by October 1, 2027 to affected current and former workers and contractors that the agreements are unenforceable, and employers who try to enforce or enter into such covenants could face lawsuits and enforcement by the attorney general. Workers, independent contractors, performers and third‑party schedulers would likely see increased ability to change jobs, take on competing work, or accept business from prior customers, while employers would need to change hiring and retention practices and may incur legal review and notification costs. Enforcement changes mean employers who violate the ban could owe the greater of actual damages or a $5,000 statutory penalty plus attorneys’ fees and costs, creating a clear financial risk for attempts to enforce noncompetes. Confidentiality, trade secret protections, certain covenants tied to buying or selling business goodwill or franchised sales, and narrowly defined nonsolicitation agreements remain allowed, and tribal employment standards in Indian country are not altered. The bill text provided omits the complete Sec. 8 and the full text of the repealed sections, so any additional procedural or monetary details in those parts are unclear from these excerpts.