Some employers require all of their newly-hired employees to sign a non-compete clause as part of their employment contract. A non-compete clause is a legally-binding agreement that the contracted employee will not enter a relationship or perform any services for another employer in the same industry or field while he or she is employed with the first. They may also state that the employee may not work with another employer in the industry or within the region for a specific amount of time after completing his or her employment with the initial employer.
Non-competition clauses protect confidential trade information and client lists from competitors. In addition to barring an employee from working for two competing employers at the same time or within close succession of each other, non-compete clauses may also prohibit the employee from discussing sensitive company-owned information outside of the job. Such information may include company-held patents, recipes, business models, inventions or names that have not yet been patented, algorithms or creative materials.
Non-competition clauses are legal and enforceable in Washington state. Different industries may have their own rules about non-compete clauses and which related actions are acceptable. For example, RCW 49.44.200 regulates non-compete clauses in the broadcasting industry. The Washington State Department of Labor and Industries regulates and enforces all employment law and related topics in the state. For more information about non-compete clauses and other parts of employment contracts, contact our firm.
Reasonableness is Key
Not all non-compete clauses are practical, reasonable, or fair. The court has the right to determine whether or not a non-compete clause is reasonable and therefore valid. The following concerns must be addressed when determining whether or not to uphold a non-compete clause:
- The focus of the non-compete clause. Why was it created? What is it trying to protect and is this a valid concern?
- The employee’s position in the company. Is he or she trusted with any type of sensitive information or does he or she possess any unique or highly specialized skills?
- The employee’s position with another company. Is this other position in direct competition with his or her first position? Will his or her performance at one job affect his or her performance at the other?
- The proposed length of the prohibition in the non-compete clause. How long is unreasonably long to bar an individual from seeking employment with a competitor?
- The proposed radius of the prohibition in the non-compete clause. How far must one be to be outside of the original employer’s competition range?
- Any activities that are prohibited by the non-compete clause.
For example, requiring an engineer to refrain from soliciting his or her employer’s clients for one year after his or her contract with the company expires would likely be a reasonable non-compete clause. A ten-year ban for a computer repair person to contact his or her former employer’s clients would likely not be considered reasonable.
Non-competition Clause Attorneys Can Help
HKM Employment Attorneys LLP can help you create a reasonable, fair non-compete clause for your employees. Likewise, if you are facing an unreasonable non-compete clause, our team of attorneys can help you and your employer work out a better agreement. To learn more about this process, call HKM Employment Attorneys LLP at 206-838-2504.