Legislation limiting the reach of non-compete clauses in employment contracts today passed the Washington state Senate on a bipartisan 30-18 vote.
Senate Bill 5478, sponsored by Sen. Marko Liias (D-Lynnwood), would ensure that employees earning $100,000 a year or less are no longer locked into terms of employment that can limit opportunity and innovation.
“Through impassioned vision and hard work, Washington has established itself as one of the American capitals of innovation. Small startups becoming multibillion dollar enterprises are more than just stories in the Pacific Northwest, they are our economy,” said Liias. “While non-compete clauses are useful in protecting proprietary information, they have become far too commonplace — a tool to stifle innovation rather than one to protect it.”
Though non-compete clauses are common in technology industries, they have also become normalized in broader sectors of the economy, including food service.
“When 14 percent of workers who make $40,000 a year or less are forced to sign non-compete agreements, it is clear that these arrangements are being used for purposes other than protecting trade secrets,” said Liias. “There are clearly instances in which these provisions make sense, but they should not be used simply to limit workers’ employment options.”
In addition to protecting employees, SB 5478 would also prohibit non-compete clauses for independent contractors who earn $250,000 a year or less, and limit the length of non-compete clauses to 18 months.
The bill also prevents franchised companies from imposing non-compete clauses to prevent employees from seeking similar jobs with competitors in the same field, including among food service franchises or big box stores. It also ensures individuals can work a second job when needed, an often-necessary option to help make ends meet.
SB 5478 passed on a bipartisan vote of 30-18 and now moves to the House of Representatives for consideration.
