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Breaking the Bind: Washington Bans Non-Compete Agreements

Breaking the Bind: Washington Bans Non-Compete Agreements

On March 23, 2026, Governor Bob Ferguson signed into law HB 1155, which effectively bans nearly all non-competition agreements for Washington-based employees and independent contractors. With this law going into effect on June 30, 2027, Washington joins California, Minnesota, Montana, North Dakota, Wyoming, and Oklahoma in prohibiting non-competition agreements.

As of June 30, 2027, it will be illegal for an employer to attempt to enter into, enforce, or represent to employees and independent contractors that they are subject to a non-competition covenant. All non-competition covenants, with narrow exceptions, impacting Washington-based employees and independent contractors are void and unenforceable, regardless of when the parties entered into the non-competition agreement. By October 1, 2027, all employers must make reasonable efforts to provide written notice to any current or former employee or independent contractor who is still within the effective time period that the non-competition covenant is void and unenforceable.

Non-Competition Covenant is Broadly Defined

The prohibition on non-competition covenants must be “liberally construed” and exceptions “narrowly construed.”  A “noncompetition covenant” is defined as “any covenant, agreement, or contract that prohibits or restrains an employee or an independent contractor from engaging in a lawful profession, trade, or business of any kind.” Based on this definition, any restriction placed on an employee or independent contractor that prevents the employee from engaging in a lawful profession or business falls under the definition of a non-competition covenant and is subject to the new legislation. The agreement does not have to reference a non-competition covenant. If the agreement restrains the employee from conducting business or trade, it will be considered a non-competition covenant.

Along with prohibiting or restraining an employee from engaging in a lawful profession, the ban includes:

  • Restrictions on joining a competitor;
  • Limitations on doing business with customers; and
  • Requiring employees to repay or forfeit compensation if they accept another job. This is a newly added section to the statute governing non-competition covenants. The purpose of this addition is to prohibit employment agreements with claw-back terms or bonuses that are offered to incentivize an employee not to compete against the employer.

Narrow Exceptions to the Prohibition of Non-Competition Covenants

  • Employers may still enforce non-solicitation agreements that prohibit the solicitation of employees to leave the employer.
  • Employers may still enforce non-solicitation agreements that prohibit the solicitation of current or prospective customers, patients, or clients of the employer to “shift business away” from the employer, if the employee established or developed a relationship through work and the prohibition is no longer than an 18-month restrictive period.
  • Employers may still restrict the use of or possession of a company’s confidential and proprietary information and prohibit the use or disclosure of trade secrets or inventions.
  • Non-competition covenants between franchisees arising out of a franchise sale remain permitted.
  • Non-competition covenants during the sale of a business are valid so long as the individual holds at least a one percent ownership interest.
  • A newly added section relates to the payment of educational expenses between an employer and a current or potential employee. It must be limited to actual costs, capped at 18 months after the employee’s start date, limit repayment to the pro rata portion of the remaining time of the 18-month period, and be waived if the employee leaves for good cause.

Penalties if an Employer Violates this Statute

HB 1155 allows for the attorney general or an individual to bring a civil cause of action to pursue any and all relief set out in this statute. Damages include those actual damages incurred by the individual, or a statutory penalty of $5,000, plus reasonable attorneys’ fees, expenses, and costs incurred in the proceeding.

In the last several years, Washington employers have experienced an influx of class actions arising out of recently passed or amended legislation. We expect that this amendment will generate more litigation.

Recommendations

Employers should start now and not wait until August 2027 to prepare for the October 1, 2027, compliance deadline. In preparation for compliance, employers should do the following:

  • Identify, review, and modify all agreements that have non-compete and non-solicitation terms to ensure consistency with the law;
  • Review bonus and retention agreements and modify any terms that require repayment or forfeiture if found to be competing with the employer;
  • Cease entering into non-competition agreements;
  • Prepare written notice and identify impacted current and former employees who should receive notice by October 1, 2027; and
  • Consult with employment counsel for guidance on compliance with the law.

For questions or guidance on how HB 1155 may impact your organization, please reach out to your GRSM attorney, an author of this legal alert, or a member of GRSM’s Employment team.

GRSM Appellate Co-Chair Gretchen Harris Sperry Highlights Key Takeaways on State Constitutional Interpretation

GRSM Appellate Co-Chair Gretchen Harris Sperry Highlights Key Takeaways on State Constitutional Interpretation

Gordon Rees Scully Mansukhani Appellate Practice Co-Chair Gretchen Harris Sperry authored an article in the American Bar Association’s Appellate Issues publication, recapping a panel at the annual Appellate Judges Education Institute (AJEI) Summit. The panelists shed light on state constitutional interpretation, covering the differences between federal and state constitutions, strategies for litigation in state constitutional cases, the value of utilizing legislative history and other states’ constitutions as interpretive clues, and procedural requirements when pursuing constitutional claims.

Read the full article on the American Bar Association’s website. Subscription may be required.

GRSM Secures Summary Judgment for Premises Liability Action in Massachusetts

GRSM Secures Summary Judgment for Premises Liability Action in Massachusetts

Gordon Rees Scully Mansukhani Partner Tara Lynch and Associate Cole Pittman obtained a significant legal victory when the United States District Court for the District of Massachusetts granted GRSM’s client’s motion for summary judgment and denied the plaintiff’s motion to amend, disposing of the case in its entirety before trial.

The suit arose from an alleged fall by the plaintiff, a store patron, inside one of the client’s Massachusetts locations. Although the complaint initially identified the wrong store location, discovery established that the alleged fall occurred at another Massachusetts store. The plaintiff pursued a claim of negligence, asserting that GRSM’s client failed to maintain its premises in a reasonably safe condition. According to the plaintiff, a purported defect in the tile flooring, described as a “dry spot”, caused her foot to stop and led to the fall. No visible condition was identified in the area where the incident allegedly occurred, and there was no incident report or surveillance footage documenting the event. The plaintiff denied observing any defect with the floor that caused or contributed to her fall.

In a lengthy memorandum, the court held that the plaintiff failed to establish the existence of any defect or dangerous condition on the sales floor. The court further rejected as speculative the theory that routine cleaning or buffing might have altered floor traction, noting the absence of photographs, expert testimony, or other corroborating proof.

The court also rejected the plaintiff’s spoliation claim tied to an alleged failure to preserve surveillance footage. The record contained no evidence that any video of the incident ever existed, and the client had no duty to preserve footage where it did not receive notice of a potential claim until after its standard video retention period had expired.

More than a year after the deadline for amendments, the plaintiff moved to amend the complaint. The court denied this motion as untimely and further found the proposed amendment futile because it did not cure the evidentiary defects fatal to the plaintiff’s claim.

The court’s summary judgment ruling resolves the case in full, eliminating the need for trial in a matter pending for more than two years and sparing GRSM’s client the expense and uncertainty of further litigation. The defense of the client, a large national retail chain, was supported by Partner Mark Trokan and groups across GRSM’s General Liability Coverage and Retail and Hospitality.  practices.

GRSM Mississippi Team Secures Summary Judgment Dismissal in Wrongful Death Premises Liability Case

GRSM Mississippi Team Secures Summary Judgment Dismissal in Wrongful Death Premises Liability Case

Gordon Rees Scully Mansukhani Partner Hiawatha Northington II recently obtained summary judgment and dismissal on behalf of the firm’s client in a wrongful death premises liability claim.

The case arose out of a stabbing incident at an apartment complex, which was owned and operated by GRSM’s client. The victim had allegedly been stabbed by a tenant of the apartment complex while on the premises, though there was a dispute between the parties as to whether he was an invitee, licensee, or trespasser at the time of the incident. Nonetheless, the victim was charged with trespassing by local law enforcement, and he ultimately passed away.

The personal representative of the decedent filed suit against numerous parties, including GRSM’s client, the owner and operator of the apartment complex. The plaintiff claimed that the apartment complex failed to maintain the premises in a safe condition because it allegedly failed to prevent the stabbing incident from taking place, either by failing to provide adequate security or by failing to properly check the background of the tenant for a propensity toward criminal behavior.

Before any depositions were taken, GRSM acted swiftly and filed a motion for summary judgment, noting that because the plaintiff’s claim was essentially a premises liability claim of an invitee arising out of a criminal act, the Mississippi Landowners Protection Act applied. Since the plaintiff did not satisfy the essential requirements of the Act, which included proving that the apartment complex “impelled” the criminal act, the plaintiff’s claim could not survive summary judgment.

The district court not only agreed with GRSM’s argument but also further examined the plaintiff’s claim under traditional analysis of duties owed to trespassers and licensees, concluding that the apartment complex did not willfully or wantonly act to injure the decedent. Accordingly, no matter the classification of the decedent, the trial court found that the plaintiff failed to create a genuine issue of material fact and determined that summary judgment was indeed appropriate.

GRSM’s early engagement in motion practice in this case secured a favorable outcome for its client, consistent with both the Landowners Protection Act and Mississippi common law governing premises liability cases.

U.S. Department of Labor Wage and Hour Investigations: What Employers Should Know

U.S. Department of Labor Wage and Hour Investigations: What Employers Should Know

A U.S. Department of Labor Wage and Hour Division (WHD) investigation often begins with a letter requesting payroll records, employee information, and other employment data. WHD investigations may arise from employee complaints, agency-directed initiatives, or inter-agency referrals and can impact employers across all industries.

The WHD conducts these investigations under the Fair Labor Standards Act (FLSA) and the Service Contract Act (SCA), which authorize the agency to enter and inspect workplaces, examine records, and interview employees to determine compliance with federal wage and hour laws. Employers should act promptly upon receipt, as initial responses can significantly shape the scope and direction of the investigation.

The WHD’s requests for documents and information can include payroll records, timekeeping data, employee classifications, and employee contact information. The agency may also interview employees and management. Records produced and information gathered during this phase often drive findings, so employers should ensure responses are accurate, complete, and carefully reviewed by counsel familiar with WHD investigations before submission.

Following its review of the submission, WHD typically holds a closing conference to present findings, including any alleged violations and back wage calculations. Findings often turn on fact-specific issues such as employee classification, timekeeping practices, and calculation of the regular rate of pay.

If the parties do not reach a resolution at the closing conference, WHD may pursue administrative enforcement. Early resolution can address alleged issues before escalation, but if the matter proceeds further, it may result in increased exposure, including additional damages and public filings.

Compliance and Preparedness Measures for Employers:

  • Maintain accurate, complete, and consistent payroll and timekeeping records.
  • Review employee classifications (exempt vs. non-exempt and independent contractor status) for compliance.
  • Ensure compensation practices, including overtime and bonus calculations, comply with FLSA requirements.
  • Prepare management for interviews and ensure consistent, accurate communication.
  • Evaluate document requests carefully and respond in a timely, organized manner.

Impact

WHD investigations present significant legal and operational risk. Proactive compliance, coupled with early legal guidance, can help manage the process efficiently and reduce potential exposure.

For questions or guidance on how a WHD investigation may impact your organization, please reach out to your Gordon Rees Scully Mansukhani attorney or a member of the Employment team.

Alexandra R. Hassell Joins GRSM as Senior Counsel in Boston Office

Alexandra R. Hassell Joins GRSM as Senior Counsel in Boston Office

Gordon Rees Scully Mansukhani welcomes Alexandra R. Hassell as Senior Counsel in the firm’s Boston office, further strengthening the firm’s employment law capabilities in Massachusetts and across the country. 

Hassell provides proactive, practical counsel to employers while leveraging her litigation experience to help clients navigate complex workplace challenges. She represents clients across a wide range of industries in employment matters spanning pre-litigation disputes through high-stakes litigation, including claims involving discrimination, retaliation, and other workplace issues.

Known for her attention to detail and thoughtful approach, Hassell brings a deep understanding of nuanced employment issues and develops comprehensive strategies designed for each client’s business objectives. She regularly advises employers on risk mitigation, dispute resolution, and workplace policies, and partners in close collaboration with clients to address challenges before they escalate into litigation. When disputes do arise, she is a strong advocate, guiding employers through all stages of litigation with a focus on efficient, results-driven outcomes.

In addition to her client work, Hassell is an active leader in the legal and local community. She serves as President of the Suffolk University Law School Alumni Board of Directors and is a member of the Urban College of Boston President’s Advisory Council. She is also engaged with the Boston Bar Association, serves on the Board of Directors of the Women’s Bar Association of Massachusetts, the National Association of Women Lawyers, where she contributes to the Amicus Committee, and serves as the Company Teams Chair for the Pancreatic Cancer Action Network. Her leadership has been recognized through her selection to the 2025 class of the Mary K. Ryan Women’s Leadership Initiative.

Hassell earned her J.D. from Suffolk University Law School and her M.B.A. from Babson College’s F.W. Olin Graduate School of Business. She holds a B.A. in Journalism from Northeastern University. She is admitted to practice in Massachusetts, the U.S. District Court for the District of Massachusetts, the U.S. Court of Appeals for the First Circuit, and the U.S. Supreme Court.

The Boston team collaborates closely with GRSM attorneys nationwide, leveraging the firm’s full-service, 50-state platform to deliver seamless legal services to clients across industries.

Learn more about GRSM’s Boston office and the firm’s continued growth across key markets nationwide.

GRSM Obtains Complete Dismissal of Stop-Loss Reimbursement Claims in ERISA Dispute

GRSM Obtains Complete Dismissal of Stop-Loss Reimbursement Claims in ERISA Dispute

Gordon Rees Scully Mansukhani Livingston Partner Elizabeth Lorell and Philadelphia Associate John MacGowan secured complete dismissal with prejudice of all claims against the firm’s stop-loss insurance client in a high-stakes ERISA and insurance coverage dispute in the United States District Court for the Western District of Pennsylvania.

The court held that the plaintiff health plan failed to state plausible claims under both ERISA Section 502(a)(3) and state contract law for more than $2.5 million in disputed stop-loss reimbursement. The ruling turned on the court’s interpretation of unambiguous stop-loss policy language defining when medical expenses are “incurred” and which participants qualify as “covered persons” eligible for reimbursement.

The dispute arose when a plan participant’s health coverage terminated due to non-payment, but his hospitalization, which began while he was still covered, continued for more than three months after termination. The health plan paid substantial post-termination medical bills and sought reimbursement from GRSM’s client, arguing the expenses should be covered under creative theories involving DRG bundling and policy “run-in” provisions.

The GRSM team successfully demonstrated that the stop-loss policy’s plain language excluded post-termination expenses for ineligible participants. The court agreed that the plaintiff’s ERISA claim impermissibly sought legal relief, monetary reimbursement characterized as “quintessentially an action at law,” rather than the equitable relief required under Section 502(a)(3). On the breach of contract claim, the court held that once the participant’s eligibility ended, all subsequent medical expenses fell outside the policy’s coverage as a matter of law, and the court rejected the plaintiff’s DRG and run-in arguments as inconsistent with the policy’s unambiguous terms.

The GRSM team argued that any amendment would be futile given the policy’s clear language and the allegations in the complaint. The court agreed, granting dismissal with prejudice. This final dismissal bars the plaintiff from re-pleading these claims and completely removes GRSM’s client from the litigation without incurring any discovery costs.

GRSM Attorney Caitlin Mitchell Shares Insights on Recent U.S. Supreme Court Decisions and Increasing Use of Emergency Docket

GRSM Attorney Caitlin Mitchell Shares Insights on Recent U.S. Supreme Court Decisions and Increasing Use of Emergency Docket

Gordon Rees Scully Mansukhani Senior Counsel Caitlin Mitchell authored an article in the American Bar Association’s Appellate Issues publication, recapping a presentation at the annual Appellate Judges Education Institute (AJEI) Summit. In the presentation, Dean Erwin Chemerinsky examined recent actions by the Supreme Court, focusing on the increasing frequency with which cases from the emergency docket are being resolved. He explored how this trend allows the Supreme Court to potentially overturn long-established precedents without the benefit of full briefing, oral arguments, or a comprehensive opinion from the justices.

Read the full article on the American Bar Association’s website. Subscription may be required.

New York’s RAISE Act Sets the Pace for State-Level AI Oversight, Published by Law360

New York’s RAISE Act Sets the Pace for State-Level AI Oversight, Published by Law360

In late December 2025, New York Governor Kathy Hochul signed into law the Responsible AI Safety and Education Act (RAISE Act), positioning New York among the earliest U.S. states to adopt a comprehensive regulatory regime for advanced artificial intelligence (AI). The RAISE Act, slated to take effect March 19, with enforcement phased through January 2027, imposes substantive safety, transparency, reporting, and oversight requirements on a narrow segment of frontier AI developers.

In a recent article published in Law360, Associate J. Michael Paulino outlines those targeted by the RAISE Act, its requirements, and its implications for businesses deploying frontier AI systems. He also provides an overview of the NIST AI Risk Management Framework, a guide to assist organizations in adhering to an internationally recognized standard for regulating frontier AI models, mitigating regulatory exposure, and touches upon key considerations for businesses when negotiating contracts with AI vendors.

J. Michael Paulino is an Associate in the firm’s Commercial Litigation practice, where he focuses his practice on cybersecurity, data privacy, and artificial intelligence law. His practice encompasses matters arising under state and federal privacy statutes and emerging AI governance frameworks. His prior experience as corporate counsel complements his ability to assess and counsel clients on privacy, cybersecurity, and technology-related issues from a litigation and regulatory perspective.

Read the full article in Law360.

GRSM St. Louis Team Secures Dismissal in Intellectual Property Dispute

GRSM St. Louis Team Secures Dismissal in Intellectual Property Dispute

Gordon Rees Scully Mansukhani St. Louis Senior Counsel Kevin Peek and Associate Donald Hageman, III successfully obtained a dismissal of all claims against GRSM’s client in a complex intellectual property dispute pending in federal court.

The case arose from a terminated distribution relationship between the parties, after the plaintiff asserted a broad range of claims, including breach of contract, federal trademark infringement, unfair competition, and related state law causes of action. The plaintiff alleged that the defendant engaged in improper post-termination conduct involving the marketing and sale of competing products and the use of allegedly similar branding.

GRSM moved to dismiss the complaint on multiple grounds, including lack of personal jurisdiction and improper venue. The court granted the motion, finding that a mandatory forum selection clause governed the dispute and required that all claims be brought exclusively in a different forum.

The court determined that the forum selection clause was valid, enforceable, and sufficiently broad to encompass all asserted claims, including statutory claims, because they arose from the parties’ contractual relationship. The court further held that, in the absence of the contractually agreed forum, the plaintiff failed to establish an independent basis for personal jurisdiction.

Based on these findings, the court dismissed the action in its entirety for lack of personal jurisdiction. This outcome demonstrates the strength of GRSM’s Intellectual Property Litigation practice in managing complex trademark disputes. The team’s skilled litigators and deep IP knowledge ensure client assets are protected through tailored legal strategies.