Are NDAs for low-wage workers enforceable under Washington state law?

In Washington state, NDAs that function as restrictive covenants are generally unenforceable against low-wage workers. Under RCW 49.62, any agreement that restricts a worker's ability to engage in a lawful profession is void unless it meets specific salary thresholds and disclosure requirements set by the state.

The Legal Landscape of RCW 49.62

Washington law is among the most protective in the United States regarding worker mobility. The primary statute governing these agreements is RCW 49.62, which strictly regulates "restrictive covenants." While the law specifically targets non-compete agreements, it also applies to any contract provision that prohibits, restrains, or penalizes a worker from working for a competitor or starting a competing business.

The Salary Threshold Requirement

For a restrictive covenant to be enforceable, the employee must earn above a specific annual salary threshold. These numbers are updated annually by the Washington State Department of Labor & Industries (L&I) based on the Consumer Price Index.

• Employees: Must earn more than $120,559.99 per year (as of 2024).
• Independent Contractors: Must earn more than $301,399.97 per year (as of 2024).

Key takeaway: If your annual compensation falls below these thresholds, any contract clause that prevents you from working for a competitor is legally void and unenforceable in Washington courts.

Action Item: Check your most recent W-2 or 1099 earnings against the current L&I threshold. If you are below the limit, the restrictive covenant is likely invalid.

Distinguishing NDAs from Non-Competes

A common point of confusion is the difference between a standard Non-Disclosure Agreement (NDA) and a non-compete. Washington law allows employers to protect legitimate trade secrets, but they cannot use an NDA as a "backdoor" non-compete.

When an NDA Becomes Unenforceable

An NDA is considered a restrictive covenant if it is so broad that it effectively prevents you from working in your chosen field. If an NDA prohibits you from using "general knowledge, skills, or information" acquired during your employment, it may be challenged as an unlawful restraint on trade.

Action Item: Review your NDA for "overbreadth." If the definition of "Confidential Information" includes skills you learned on the job, the clause is likely overreaching.

Requirements for Enforceability

Even if an employee earns above the salary threshold, the agreement must meet additional procedural requirements to be valid under Washington law:

1. Disclosure: The terms must be disclosed to the prospective employee in writing no later than the time of the acceptance of the offer.
2. Independent Consideration: If the agreement is signed after the start of employment, the employer must provide additional, independent consideration (e.g., a bonus or promotion).
3. Reasonableness: The restriction must be reasonable in duration, geographic scope, and subject matter.

Key takeaway: An agreement that is not disclosed until after you have started working is generally unenforceable unless the employer provides new, tangible benefits in exchange for your signature.

Action Item: Document the date you received the contract. If you were asked to sign it after your first day of work without receiving a raise or bonus, flag this for legal review.

What to Do If You Are Threatened with Litigation

If an employer attempts to enforce an invalid NDA or non-compete, they may be liable for damages. RCW 49.62 allows for the recovery of actual damages, a penalty of $5,000, and reasonable attorney fees if a court finds the agreement violates the law.

• Gather Evidence: Keep copies of your offer letter, the signed contract, and your pay stubs.
• Consult Counsel: Do not assume the contract is valid just because it is written on legal letterhead.
• Request Clarification: Ask the employer to specify which "trade secret" you are allegedly violating.

Action Item: If you are being pressured, do not sign a release or settlement without first having a professional review the specific language of your contract.

Navigating the nuances of Washington employment law can be complex, but you don't have to do it alone. TermScore uses advanced AI to instantly analyze your employment contracts, identifying unenforceable clauses and flagging potential risks against current Washington state statutes so you can understand your rights before you sign.