Page 26 - Pierce County Lawyer - September October 2025

Restrictions on Noncompete
Agreements for Low Wage Workers
By Richard B. Lumley, Smith Alling, PS
In a recent case of first impression,
David v. Freedom Vans LLC, 4 Wn.
3d 242, 562 P.3d 351 (2025) (en
banc) (“Freedom Vans”), the Washington
Supreme Court provided guidance on
interpreting Chapter 49.62 RCW—a
statute enacted in 2019 that regulates
noncompete clauses in employment
contracts—and its relation to the
common law duty of loyalty.
Under RCW 49.62.070(1), Washington
employers who pay employees less
than twice the minimum wage1 cannot
prohibit them from working second jobs,
subject to several limited exceptions. Id.
The statute provides that employers may
impose restrictions on their employees
consistent with the common law duty
of loyalty but does not provide further
explanation. See RCW 49.62.070(2)(b).
Freedom Vans involved two employees
who never earned more than twice the
hourly minimum wage. 562 P.3d at 353.
Their employer required all employees
to sign a noncompete agreement
prohibiting them from “directly or
indirectly engag[ing] in any business
that competes” with Freedom Vans LLC
during their employment. Id. “Direct
or indirect competition” was defined
to include “engaging in a business as
owner, partner, or agent” or “becoming
an employee of any third party that is
engaged” in a “competitive business.”
Id. The employees signed the agreement
out of concern for their jobs, and they
also claimed to have declined offers
to take on additional work for fear of
termination and adverse legal action by
their employer. Id.
After leaving their jobs, the employees
filed a class action lawsuit against their
former employer, alleging that their
1 RCW 49.62.070 applies to workers making less than
$33.32 per hour, twice the State’s mandated minimum
wage. The Court noted that this statute protects, among
others, workers such as custodians, landscapers,
morticians, barbers, group fitness instructors, childcare
workers, retail salespersons, travel agents, human
resource assistants, postal service mail carriers, and
farmworkers.
noncompete agreement violated chapter
49.62 RCW, and seeking damages and
injunctive and declaratory relief. Id. The
employer filed a motion for summary
judgment, arguing that the noncompete
agreement was permissible under the
statute and asking for an award of
attorney fees. Id. The Superior Court
granted summary judgment but denied
the employer’s request for attorney fees,
and the Court of Appeals affirmed in an
unpublished opinion. Id. The Supreme
Court reversed. Id., at 353-54.
In overturning the lower courts, the
Supreme Court emphasized that its
objective when interpreting statutes is to
ascertain and carry out the Legislature’s
intent. See id., at 354-55 (citing Dep’t
of Ecology v. Campbell & Gwinn, LLC,
146 Wn. 2d 1, 43 P.3d 4 (2002) and In
re Recall of Pearsall-Stipek, 141 Wn. 2d
756, 10 P.3d 1034 (2000)). To this end,
the Court found several provisions
significant in defining the scope of an
employer’s authority to restrict low
wage workers from obtaining additional
employment under the statute:
• RCW 49.62.005(2) (stating that
agreements limiting competition
or hiring may be unreasonable
contracts of adhesion);
• RCW 49.62.005(3) (stating that
the provisions in chapter 49.62
RCW facilitating workforce mobility
and protecting employees and
independent contractors need to be
liberally construed and exceptions
narrowly construed) (emphasis in
Opinion); and
• RCW 49.62.110 (stating that
Chapter 49.62 RCW is an exercise
of the state’s police power and
shall be construed liberally for the
accomplishment of its purposes).
Considering these provisions, the
Supreme Court determined that
prohibiting employees from engaging in
“all kinds of assistance” with a competitor
would be contrary to the Legislature’s
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intent to facilitate workforce mobility
and 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. Id., at
356.2 Instead, the kinds of competition
prohibited by a noncompete agreement
for low wage employees under RCW
49.62.070 must be “narrow” and the
agreement must be “reasonable.”3 Id., at
357. The determination of reasonableness
is made on a case-by-case basis, as
courts consider factors such as whether
there is a need to protect the employer’s
business or good will, the restraint on the
employee is reasonably necessary, and
if enforcing the noncompete agreement
violates public policy. Id.
Concurrences from Justice Whitener
and Justice Lewis provide two alternative
interpretations on the scope of
noncompete agreements for low wage
workers based on the duty of loyalty. Id.,
at 357-60. Justice Whitener distinguished
direct competitive acts (i.e., soliciting
customers for a rival business or acting
2 The Court affirmed that Kieburtz & Assocs., Inc. v.
Rehn, 68 Wn. App. 260, 265, 842 P.2d 985 (1992) (hold-
ing that during the course of employment an employee
is not entitled to solicit customers for a rival business or
to act in direct competition with the employer’s business)
is “a foundational case in Washington regarding an em-
ployee’s common law duty of loyalty as it relates to non-
compete agreements more broadly,” but nevertheless
reasoned that Kieburtz was inapplicable because it was
published almost three decades before the enactment
of chapter 49.62 RCW and does not interpret the duty of
loyalty within the context of chapter 49.62 RCW.
3 RCW 49.62.070(2)(b) provides that noncompete
agreements are subject to the common law, and the
common law provides that noncompete agreements
are subject to a reasonableness standard. See, e.g.,
Labriola v. Pollard Grp., Inc., 152 Wn.2d 828, 833, 100
P.3d 791 (2004) and Emerick v. Cardiac Study Ctr., Inc.,
PS, 189 Wn. App. 711, 721, 357 P.3d 696 (2015)).