Washington legislators have passed – and the governor is expected to sign – two new laws that employers and employees will both want to know about.
Pay Equity
If signed by the governor, effective July 29, 2019, employers will be prohibited from asking for prior salary history from applicants (including existing employees seeking promotions and transfers) and their current or past employers.
The bill also enhances pay transparency requirements by requiring employers with at least fifteen employees to provide the minimum wage or salary for the applicant’s new position upon the request of any applicant to whom an offer has been extended. Internally promoted and transferred employees have the same rights.
Washington’s Equal Pay Opportunity Act, which became effective last summer, already bans employers from relying on salary history to establish pay or to screen applicants or employees. The new law makes it clear that employers are not allowed to request or use that history.
An applicant may voluntarily share compensation history, but otherwise, the new law allows employers to confirm an applicant’s past pay only after making an offer of employment with compensation.
Washington employers should quickly train managers about this new law and revise applications to delete questions about pay history.
Further, employers who don’t already have set wage and salary ranges for each position should begin the process of creating such ranges. If there is no such set range, an employer must provide the minimum wage or salary expectation set by the employer prior to posting the position, making the position transfer, or making the promotion.
Noncompetition Agreements
Assuming HB 1450 is, as anticipated, signed by Governor Inslee, as of January 1, 2020, noncompetition agreements will be void in the state of Washington for employees whose W-2 earnings – from the employer attempting to enforce the agreement – are less than $100,000 annually.
Further, the employer must disclose the terms of the covenant in writing to the prospective employee no later than acceptance of the offer of employment. If the agreement becomes enforceable only at a later date due to changes in the employee’s compensation, the employer must specifically disclose that the agreement may be enforceable against the employee in the future.
A noncompete covenant entered into after the employment begins is void unless the employer provides independent consideration for that covenant.
The new law will also prohibit enforcement of noncompetition agreements against independent contractors whose 1099-MISC earnings from the party seeking to enforcement the noncompete are less than $250,000 per year.
Both of these figures will be adjusted for inflation annually.
If an agreement is found to violate the new law, or if the court has to modify any part of the agreement to make it “reasonable,” then the employer will be required to pay the greater of the employee’s actual damages or $5,000, plus the employee’s attorneys’ fees, expenses and costs.
Noncompete agreements that last longer than 18 months will be presumed to be unreasonable. For performers in the entertainment industry, anything over three days is presumed unreasonable.
To rebut the presumption of unreasonability, the employer must prove that a longer duration is necessary to protect the employer’s business or goodwill.
If an employee is laid off, an otherwise valid covenant not to compete will be void unless the employee is paid compensation equivalent to the employee’s base salary at the time of termination for the period of enforcement minus all compensation earned through subsequent employment.
A provision in an agreement signed by a Washington-based employee or independent contractor that requires disputes to be adjudicated outside Washington will also be void.
If this bill becomes law, anti-moonlighting restrictions will be prohibited for employees who earn less than twice Washington’s minimum wage. There are exceptions where the additional work raises safety issues or interferes with the employer’s “reasonable and normal scheduling expectations.”
In addition, franchisers will be banned from restricting franchisees from soliciting or hiring employees of the franchiser or of another franchisee.
Nonsolicitation, confidentiality, and trade secret agreements are not considered to be noncompetition provisions for purposes of this law. Nor does this law apply to a covenant entered into by a person purchasing or selling the goodwill of a business or otherwise acquiring or disposing of an ownership interest or to a covenant entered into by a franchisee when the franchise sale complies with applicable law.
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Please feel free to contact us if you have any questions about these new laws or if you’d like to know whether your state has similar laws.
Photo by Cytonn Photography on Unsplash
