As the economy continues to hum along and employers are looking for new hires, employers should be aware of two new laws recently passed by the Legislature and signed into law by Gov. Jay Inslee in May that place new restrictions on salary negotiation and noncompetition agreements.
Salary History Ban
On May 9, 2019, Gov. Inslee signed HB 1696, the Equal Pay and Opportunities Act (“the Act”) that prohibits employers from inquiring about applicants’ salary histories effective July 28, 2019. The Act prohibits employers from seeking the wage or salary history of an applicant from either the applicant or the applicant’s former or current employer. Employers may confirm an applicant’s wage or salary history only if the applicant voluntarily discloses it or the employer has already negotiated and made an offer of employment with compensation to the applicant.
The Act further provides that, upon the request of the applicant and after the applicant has been initially offered the position, the employer must provide the minimum wage or salary for the position. For applicants for internal transfers or promotions, the employer must, upon request of the applicant, provide the wage scale or salary range for the position. If no wage scale or salary range exists, the employer must provide the minimum wage or salary expectation set prior to posting the position, transfer, or promotion. This section of the Act applies only to employers with 15 or more employees.
Employers violating the Act may be subject to civil remedies pursuant to RCW 49.58.060 and 49.58.070 that include damages, costs and attorneys’ fees.
Restrictions on Noncompetition Covenants
Gov. Inslee signed HB 1450 into law on May 8, 2019, adding significant restrictions on the enforceability of noncompete agreements in Washington. Beginning Jan. 1, 2020, noncompete agreements or clauses must meet the following new criteria to be enforceable:
♦ Notice and Consideration — Employers must disclose the terms of the noncompete in writing no later than when the employment offer is accepted. If the noncompete signed by a new employee later becomes enforceable because of changes in the employee’s compensation, the employer must specifically disclose that the noncompete may be enforceable in the future. For noncompetes signed after employment begins, independent consideration must be given.
♦ Salary Threshold — Employees must earn $100,000 or more per year and independent contractors must earn $250,000 or more per year. The salary threshold will adjust annually for inflation.
♦ Length — Noncompete agreements with durations exceeding eighteen (18) months are presumed unreasonable and unenforceable. In some instances, a period of greater than 18 months may be reasonable to protect an employer’s business or goodwill.
♦ Employment Separation — If an employee is laid off, the employee must receive compensation equal to the employee’s base salary at the time of termination (minus earned replacement compensation) for the duration of the period of enforcement.
♦ Moonlighting — Employers may not prohibit employees who earn less than twice the state minimum wage from having additional jobs or being an independent contractor.
The new law will impact all enforcement proceedings commenced on or after Jan. 1, 2020 regardless of when the noncompete agreement was originally signed. Though the law authorizes courts and arbitrators to rewrite, modify, or reform noncompete agreements, the party seeking enforcement may be forced to pay damages, costs, and reasonable attorneys’ fees.
Erin McCool is a Member in the Wenatchee office of Ogden Murphy Wallace, PLLC, practicing in the areas of litigation, employment and labor law, and land use and water. She provides advice and consultation to local businesses, employers and municipalities regarding state and federal employment laws. She can be reached at firstname.lastname@example.org or 662-1954.