Washington narrows the use of “low-wage” anti-moonlighting restrictions

A new decision from the Supreme Court of Washington arguably narrowed the circumstances in which anti-moonlighting provisions for low-wage workers are permissible in Washington state.

Added as a part of its 2019 noncompete law overhaul, Washington prohibits employers from imposing certain anti-moonlighting restrictions on workers earning less than twice the minimum wage in Washington:

[A]n employer may not restrict, restrain, or prohibit an employee earning less than twice the applicable state minimum hourly wage from having an additional job, supplementing their income by working for another employer, working as an independent contractor, or being self-employed.

RCW 49.62.070.

Though included in the noncompete overhaul, these low-wage, anti-moonlighting restrictions govern only in-term restrictions on competition, as opposed to post-employment restrictive covenants. And, they apply only to a subset of the workers considered low-wage for purposes of post-employment covenants. 

In 2025, the threshold for anti-moonlighting covenants is $33.32 per hour, i.e., roughly $68,000 annually (assuming 2040 hours). In contrast, the 2025 threshold for noncompetes in Washington is $123,394.17 for employees and $308,485.43 for independent contractors. 

When “low-wage” anti-moonlighting provisions are permitted

The statute makes an exception to the prohibition on the use of anti-moonlighting covenants for low-wage workers. Specifically, anti-moonlighting covenants can be used for such workers when they are reasonable and necessary to ensure compliance with “the obligations of an employee to an employer under existing law, including the common law duty of loyalty and laws preventing conflicts of interest and any corresponding policies addressing such obligations.” RCW 49.62.070(2)(b).

But the new decision from the Supreme Court of Washington (David v. Freedom Van Lines LLC) interprets the statute as mandating that those exceptions be narrowly construed. The court reasoned as follows:

The legislature directed that these employee protections be construed broadly and exceptions narrowly, in order to effectuate its intent to protect low wage workers from unreasonable restrictions on additional employment. Prohibiting employees from engaging in “all kinds of assistance” with a competitor would be contrary to the legislature’s intent to protect low wage workers by allowing them to earn a supplemental income to support themselves and their families and would unreasonably broaden the duty of loyalty. A narrow construction of the common law exception is also consistent with the economic realities animating the legislature’s objective to facilitate workforce mobility, as many low wage workers must work multiple jobs to provide for themselves and their families.

The specific holding is “that barring employees from providing any kind of assistance to competitors exceeds a narrow construction of the duty of loyalty, contrary to the legislature’s intent to protect low wage employees.” The court elaborated as follows:

In other words, the kinds of competition prohibited must be narrow in the context of chapter 49.62 RCW and noncompete agreements must be reasonable. Employers may impose some prohibitions short of that standard that are consistent with the duty of loyalty. Those prohibitions must be reasonable in light of the facts and specific provisions within the noncompete agreement, and must be consistent with the legislature’s stated requirement that the duty of loyalty is to be narrowly construed.

Reasonableness is decided on a case-by-case basis. In assessing reasonableness, courts consider factors such as whether there is a need to protect the employer’s business or goodwill, whether the restraint on the employee is reasonably necessary, and whether enforcing the noncompete agreement violates public policy.

Takeaways

Companies with employees in Washington should ensure that their agreements — and their policies — do not include anti-moonlighting provisions applicable to employees earning less than twice the Washington minimum wage (i.e., $33.32 per hour). 

Alternatively, for companies feeling they need to use such provisions for low-wage workers, they should consider whether it is feasible to make a case-by-case assessment (such as on a job-function basis) for any low-wage employee required to sign one. Regardless, the restriction should, in all instances, be narrowly tailored to prohibit only the kind of work necessary and reasonable to protect the employer’s business (think trade secrets and confidential information) and goodwill.

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Firm resources: 

We know how hard it is to keep up with the ever-changing laws and requirements around the country for how you can protect company’s trade secrets, customer goodwill, and the integrity of your workforce. To help, we have created the following resources (available for free):

	50-State Noncompete Law Chart, the first of its kind and regularly updated (downloadable PDF) (to be updated for the new exemptions in Illinois and Pennsylvania)50-State and Federal Trade Secret Law Chart, providing a comparison of the trade secrets laws nationally to the Uniform Trade Secrets Act (downloadable PDF)
	Chart of Noncompete “Low-Wage” Thresholds and Criteria (downloadable)
	Notice requirements summary chart, providing details for each of the 8 states (plus D.C.) that has notice requirements related to noncompetes (downloadable PDF)
	“Changing Trade Secrets | Noncompete Laws” (dedicated blog page) now provides a current detailed summary of the changing landscape of trade secret laws and noncompete laws around the country, state by state and at the federal level
	Trade secret and other legitimate business interest protection plan strategy and checklist

We hope you find all of these resources useful. More will be coming.

And please note, we are grateful for all of the input we’ve received over the years. We welcome any suggestions for improvements that you may be willing to share.

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Shout out to Michael Schulman for finding this case.