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April 25, 2025
In a case of first impression, the Washington Supreme Court recently considered whether a non-competition agreement can legitimately prohibit low-wage workers from moonlighting in a second job. In Springer v. Freedom Vans LLC, No.102566-1 (January 23, 2025), the Washington Supreme Court found that an employer’s blanket prohibition on direct and indirect competition exceeded the scope of reasonableness required under the applicable state statute. Rather, the Court held that employers cannot prohibit low-wage workers from working second jobs, except in narrow circumstances. The Supreme Court’s ruling is consistent with the legislature’s directive that a low-wage earning employee’s duty of loyalty be narrowly construed.
The Washington Supreme Court’s opinion focused on the legislative intent and interpretation of RCW 49.62.070, which codifies Washington’s commitment to promoting workplace mobility and protecting workers from overly broad restrictive covenants. The Washington legislature recognizes that many individuals rely on multiple sources of income to earn a living wage, and RCW 49.62.070 is intended to prevent employers from wielding excessive control over an employee’s ability to engage in additional work.
The Applicable Statute
Pursuant to RCW 49.62.070(1), “[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 anther employer, working as an independent contractor, or being self-employed.”
The statute provides for an exception: “This section does not alter 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). In enacting chapter 49.62 RCW, the legislature expressly stated, “[t]he provisions in this chapter facilitating workforce mobility and protecting employees and independent contractors need to be liberally construed and exceptions narrowly construed.” RCW 49.62.005(3).
Background of the Case
Freedom Vans LLC (“Freedom”) is engaged in the business of converting vans into mobile homes. Freedom hired Mark Springer (as an electrician) and Jeremy David (to perform construction) and required them—as it does with all employees—to sign a non-competition agreement that prohibited them, during their employment, from engaging in any business that competed with Freedom. Both Springer and David were low-wage workers under RCW 49.62.070 because they never made more than twice the minimum wage (or $33.32 an hour in Washington) while working for Freedom.
After leaving their employment at Freedom, Springer and David initiated legal action against Freedom, both individually and on behalf of a class of similarly situated individuals, seeking to invalidate the non-competition restriction. The former employees alleged that, because of the non-competition restriction, which they claim violated RCW 49.62.070, “they declined offers to take on additional work building or repairing vehicles after signing the agreement because they were worried that if they accepted these side jobs, Freedom Vans would terminate their employment and potentially pursue legal action.” Specifically, they argued that an employee’s duty of loyalty does not extend to “indirect competition,” which they defined as “working for another employer doing job duties unrelated to the employee’s job duties with the original employer,” as opposed to direct competition, such as soliciting customers for a rival business or accepting work involving the same duties as their current employment. Accordingly, they argued that their non-competition restriction was overly broad and unenforceable.
Freedom, on the other hand, argued for a broad interpretation of an employee’s duty of loyalty, and took the position that current employees were prohibited from working for a competitor in any capacity that provides assistance, irrespective of whether the assistance was direct or indirect. Freedom did not appear to argue that the work performed by Springer and David involved Freedom’s trade secrets or confidential business information.
The trial court granted summary judgment in favor of Freedom and the appellate court affirmed.
The Washington Supreme Court’s Analysis
The Washington Supreme Court, in reversing the lower courts, held that Freedom’s view of the duty of loyalty was too broad and that restricting employees from assisting competitors, even during employment, could frustrate the clear legislative intent to protect low-wage workers. The Washington Supreme Court stated, “[w]e decline to adopt this expansive view of the duty of loyalty, as it would render the employee protections in Chapter 49.62 RCW meaningless and would require us to ignore the directive in the statute itself that the exceptions be construed narrowly.” The Washington Supreme Court concluded that the reasonableness of a non-competition restriction and the duty of loyalty are decided on a case-by-case basis and remanded the case to the Superior Court to decide whether the non‑competition restriction is reasonable and enforceable under the state statute.
Impact for Employers
The Washington Supreme Court’s decision highlights the balance employers must find between an employee’s right to make a reasonable living and protecting its legitimate business interests, and reinforces the legislature’s intent to promote reasonableness in non-competition restrictions. That is particularly true in the case of low-wage workers.
As with any case, the factual context is critical when considering the potential applicability to other situations. Employers in Washington should review their non-competition restrictions applicable to low-wage workers and consider if they are more broad than necessary to protect a legitimate business interest. The Washington Supreme Court’s analysis on this issue could also be influential on restrictive covenant analysis in other states with low-wage worker laws.
The author of this article, Andrew M. DeLucia, is a member of the Bars of New Jersey and Pennsylvania. This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice in New Jersey, Pennsylvania, Washington, or any other jurisdiction, nor does it establish an attorney-client relationship with any reader of the article where one does not exist. Always consult an attorney with specific legal issues.
