As you may know, Washington recently passed legislation regulating employee non-compete agreements. This went into effect at the start of 2020. One of the key provisions in this legislation is the earnings threshold. The non-compete statute nullifies non-compete agreements agreements for employees and contractors unless their earnings exceed certain statutuory thresholds.
In 2020, when the law first went into effect, the statutory earnings threshold for employees was $100,000, while the threshold for contractors was $250,000. However, the statute specifies that these dollar amounts must be adjusted annually for inflation. The Washington State Department of Labor & Industries (L&I) was tasked with making this annual adjustment.
L&I has released its adjustments for 2021 here. The 2021 threshold for employees will increase from $100,000 in 2020 to $101,390 in 2021, meaning that an employee’s annual earnings from its employer must exceed $101,390 for 2021 in order for a non-compete to be enforceable against the employee. In addition, the 2021 threshold for contractors will increase from $250,000 in 2020 to $253,475 in 2021, meaning that a contractor’s annual earnings from the party it contracts with must exceed $253,475 in order for a non-compete to be enforceable against the contractor.